Answer with explanation:
Alex monthly income = $ 2500
Usually ,it depends on your income how much debt you can bear and repay it.There are different rules to calculate amount of money you can use for debt purposes, one is [tex]\frac{28}{36}[/tex], which states that 28% of your income should be used for housing expenses and 36% for debt Purposes.And another one is 30% rule , which states 30% of your monthly income is used for debt purposes.
36 % of $ 2500
[tex]=\frac{36}{100} \times 2500\\\\=900[/tex]
Also, 30% of $ 2500
[tex]=\frac{30}{100} \times 2500\\\\=750[/tex]
So, maximum bad debt payment that Alex can maintain without being in credit overload among four options given is :
Option D : $ 500
