Sarah has $15,000 in monetary assets, $48,000 in annual living expenses, a $20,000 balance on her car loan, and $60,000 of equity in her house. What is her month's living expenses covered ratio

3.75 times

Explanation:

The formula used to calculate the monthly living expenses covered ratio is as under:

Monthly living expenses covered ratio = Monetary Assets * 12 / Annual living expenses

Here money assets is worth $15000 and annual living expense is $48,000.

By putting the values we have:

Monthly living expenses covered ratio = $15000 * 12 / $48000 = 3.75 Times

3.75

Explanation:

month's living expenses covered ratio = total liquid assets / total monthly cash expenses

total liquid assets = $15,000 (home equity is not liquid) total monthly cash expenses = $48,000 / 12 = $4,000

month's living expenses covered ratio = $15,000 / $4,000 = 3.75