Question

5. Valerie takes home $45,000 per year from her job as a computer repairperson. Her only debt obligations

are a car loan payment of $405 and a credit card payment of $110 every month. Help Valerie go through the

steps to see if she is in danger of credit overload.

Part 1: How much money does Valerie take home per month?

Part 2: what is 20% of Valerie’s monthly take-home pay?

Part 3: How much does Valerie spend in total every month toward paying off her debt?

Part 4: which is greater 20% of Valerie’s monthly take-home pay or the amount Valerie spends in total every month toward paying off her debit?

Part 5: Is Valerie in danger of credit overload?

Answer 1

Answer:

Part 1: Valerie takes home $3750 per month

Part 2: $750

Part 3: $515

Part 4: 20% of Valerie's monthly take-home pay

Part 5: No

Explanation:

Part 1:

Monthly take-home pay = yearly take-home pay/12 = $45,000/12 = $3750

Part 2: 20% of Valerie's monthly take-home pay = 20/100 × $3750 = $759

Part 3

Total expenditure every month = car loan payment + credit card payment = $405 + $110 = $515

Part 4

20% of Valerie's monthly take-home pay is $750

Total expenditure every month towards paying her debt is $515

20% of Valerie's monthly take-home pay is greater than her monthly expenditure in paying her debt

Part 5

She is not in danger of credit overload because her monthly take-home pay ($3750) far outweighs her monthly total expenditure ($515)