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9 July, 17:09

Mike and Teresa Garza have a monthly gross income of $5,000, but they pay $1,000 per month in taxes. They also pay $2,000 per month in various loan payments. What is their debt service ratio?

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  1. 9 July, 17:50
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    40%

    Explanation:

    Debt service ratio is the rate at which an individual allocates a certain amount to reduce debt value till the debt is totally offset.

    In the above question, Mike and Theresa pay $2,000 to offset various loans (debts). To calculate the debt service ratio of the couple, the amount paid to service loans is expressed as a percentage of their total income.

    We have,

    $2,000 x 100%

    $5,000

    = 0.4 x 100%

    = 40%

    Therefore, the debt service ratio of Mike and Theresa is 40%.

    Cheers.
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Home » Business » Mike and Teresa Garza have a monthly gross income of $5,000, but they pay $1,000 per month in taxes. They also pay $2,000 per month in various loan payments. What is their debt service ratio?
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