A Good Rule of Thumb Is to Limit Consumer Credit

question 19

Multiple Choice

A good rule of thumb is to limit consumer credit payments to no more than ________ percent of your net (after tax) income.

• A)20
• B)30
• C)40
• D)50
• E)60

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Definitions:

Return on Investment

A performance measure used to evaluate the efficiency of an investment or compare the efficiency of multiple investments.

Controllable Margin

Controllable Margin refers to the portion of profit or income that can be directly influenced by managerial decisions, excluding fixed costs and uncontrollable factors.

Investment Center

A division or unit within an organization that has control over its revenue, expenses, and invested capital, and is responsible for its profit and investment decisions.

Budgeted Selling Expenses

Estimated costs related to the sale of a company's products or services, planned for a future period.