Question

As an individual who earns $125,000 annual income. What is the recommended budget when purchasing a...

As an individual who earns $125,000 annual income. What is the recommended budget when purchasing a new home. Not assuming taxes, interest,

Business   Finance   
0 0
Add a commentTranscribed image text
Next >

Homework Answers

Answer #1

If the decision has to be taken to buy the house based on the amount of annual income, then the 2.5 times of annual income has to be implemented. It states that a person can afford a house that is worth 2.5 times of his/her annual income. In this case, the individual earns $125,000 then he/she can have a budgeted amount of 2.5 times the annual income i.e. $312,500.

Budgeted amount = $125,000 X 2.5

= $312,500

This is a very general rule. The decision will be influenced by many other factors like interest rate, market conditions, taxes, credit score etc.

0 0
Know the answer?
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Log In

Sign Up

Not the answer you're looking for?
Ask your own homework help question
Similar Questions
As an individual who earns $125,000 annual income. What is the recommended budget when purchasing a...
As an individual who earns $125,000 annual income. What is the recommended budget when purchasing a new home
Suppose we have a two-period model. An individual earns labor income Y0 =$100k at time zero,...
Suppose we have a two-period model. An individual earns labor income Y0 =$100k at time zero, and earns no labor income at time 1. The individual may consume or save that income. Savings grow at rate r=.03. For every dollar of consumption, the individual pays the tax rate τ=.30 to the government. Graph the two-period budget constraint for consumption. What is the slope? Is this tax distortionary? The government modifies the consumption tax somewhat so that the first $20k of...
Scenario 1: Mrs. Rogers is considering purchasing a rental home property. The annual income from the...
Scenario 1: Mrs. Rogers is considering purchasing a rental home property. The annual income from the rental house is $26,400 and the annual expenses are $7,200 (both at the end of each year). Assume the house is to be sold at the end of 12 years for $255,000 and that the interest rate is 8% per year. (Note: for simplicity, ignore taxes and depreciation). What is the maximum Mrs. Rogers is willing to pay for the rental house today? Assume...
Consider an individual who lives for two periods, earns a nominal income of $1000 in each...
Consider an individual who lives for two periods, earns a nominal income of $1000 in each period, and has zero initial and terminal assets. The nominal interest rate, R, on dollar loans is 15%, and the expected rate of inflation, πe, between the two periods is 10%. Assume that the price level in the first period is 1. A. What is the real value of period 1 income? B. What is the maximum amount of dollars that could be borrowed...
Imagine an individual who lives for two periods. The individual has a given pattern of endowment...
Imagine an individual who lives for two periods. The individual has a given pattern of endowment income (y1 and y2) and faces the positive real interest rate, r. Lifetime utility is given by U(c1, c2)= ln(c1)+β ln(c2) Suppose that the individual faces a proportional consumption tax at the rate Ԏc in each period. (If the individual consumes X in period i then he must pay XԎc to the government in taxes period). Derive the individual's budget constraint and the F.O.C...
A new tax is imposed on a scale in which an individual with an income of...
A new tax is imposed on a scale in which an individual with an income of $20,000 pays $1,000 of tax, a person with an income of $30,000 pays $3,000 of tax, a person with an income of $40,000 pays $6,000 of tax, and so forth. a. What is each person’s tax rate? b. Is this regressive, proportional, progressive? Suppose there’s no tax on the first $25,000 of income, but a 25% tax on earnings between $25,000 – $75,000 &...
1.( T or F ) An individual who directly owns real estate and earns net rental...
1.( T or F ) An individual who directly owns real estate and earns net rental income for the tax year January 1 – December 31, 2018 will have an effective tax rate of 29.6% on it. 2.( T or F ) Jumbo LLC, is treated as a partnership and is owned by 50% by two individuals, Rod and Tom. Jumbo LLC acquired Bighorn Center, an industrial rental property for $2 million and collects rent from tenants. When Bighorn Center’s...
Jim who is married but files separately, earns $80,000 of taxable income. He also has $15,000...
Jim who is married but files separately, earns $80,000 of taxable income. He also has $15,000 in interest from a city of Asheville bond.. His wife, May, earns $50,000 of taxable income. If Jim earned an additional $30,000 of taxable income this year, what would be the marginal tax rate (rounded) on the extra income for 2019? (Use tax rate schedule.)
In 2019, when determining the standard deduction for an individual who can be claimed as a...
In 2019, when determining the standard deduction for an individual who can be claimed as a dependent on another person tax return, earned income is defined as all the following except A. wages B. tips C. interest D. Fellowship grant the taxpayer must include in his or her gross income.
Suppose a firm has an annual budget of $200,000 in wages and salaries, $75,000 in materials,...
Suppose a firm has an annual budget of $200,000 in wages and salaries, $75,000 in materials, $30,000 in new equipment, $20,000 in rented property, and $35,000 in interest costs on capital. The owner-manager does not choose to pay himself, but he could receive income of $90,000 by working elsewhere. The firm earns revenues of $360,000 per year. What are the annual explicit costs for the firm described above? What are the annual implicit costs for the firm described above? What...
ADVERTISEMENT
Need Online Homework Help?

Get Answers For Free
Most questions answered within 1 hours.

Ask a Question
ADVERTISEMENT