PFIN 5th Edition by Randall Billingsley,Lawrence Gitman,Michael Joehnk

Exercise 7

Maximum affordable mortgage payment. Using the maximum ratios for a conventional mortgage, how big a monthly payment could the Clinton family afford if their gross (before-tax) monthly income amounted to $3,500? Would it make any difference if they were already making monthly installment loan payments totaling $750 on two car loans?