ANSWER BOTH PARTS PLEASE :)

Answer and post your response to the following two part question:

Part 1

• Have you ever used ratios in a sport or other activity that you have participated? Do you know of important ratios related to sports or other activities? What are 1-2 examples of these ratios? Why is the ratio more important than the absolute number? (For example in baseball the hitting percentage reflects the ratio of the total hits divided by the number of times at bat. This ratio is important because it provides a measure of efficiency at the plate.)
• How might a ratio in sports or other activities be evaluated? Explain how the ratio can be evaluated across time and across competitors. Is it possible to do both?

Part 2

• Personal finance ratios

  A ratio that is often used to evaluate the affordability of housing is that your housing expense should not exceed 30% of your take-home pay. So what is the ratio that is relevant here? The ratio is HOUSING EXPENSE / TAKE HOME PAY.

  Suppose an individual has rent of $750. And other utilities and housing-related expenses add up to an additional $200. If the individual makes $45,000 per year do they meet the minimum threshold for affordability?

  In order to decide, we first compute the ratio for this individual. First, the ratio must be computed on an annual OR a monthly basis. We can compute it on a monthly basis by dividing take-home income by 12. $45,000/12 = 3,750. We then calculate our ratio $950/3,750 = 0.253 or 25.3%. The rent is within this rule of thumb.

  We could also compute what maximum rent would be affordable. We would multiply the 30% times the monthly income. Using the above numbers we have $3,750*0.3 = $1,125.

  We could also compute the minimum earnings that are required to afford our rent we would do so by taking our monthly rent and dividing it by 30%. Using the above numbers we have $950/0.3 = 3,166.67 per month or $38,000 per year.

  Can you come up with your own example.