Yesterday Jeff was driving home from work in the family car and it broke down on the side of the highway. He had the car towed to the local garage and the mechanic told him that the transmission had blown and, since the car was 10 years old, it was not worth fixing. Tonight the couple plan to look for a new car and Lori has dropped by Everyday Bank to see you about a car loan. Jeff and Lori have borrowed from you before and their credit history is excellent. Lori would like to know what the maximum loan payment they would be approved for would be before they start shopping for the new car. You obtained the following updated information from Lori:

• Jeff has been working as a shift supervisor at a local factory for the past 8 years and he earns $66,000 per year.
• Lori works as an administrator at a local community college and earns $52,000 per year. She also works weekends at a shop that sells sewing supplies where she makes $1,200 per month.
• Jeff is an avid stamp collector who just sold a portion of his collection for $5,000 which the couple intends to use as a down-payment for the new car.
• Jeff and Lori own a condo valued at $660,000 and have a mortgage payment of $1,650 per month, heating costs of $70 per month, electricity costs of $135 per month, a monthly condo fee of $440, annual taxes of $2,100 and annual homeowner insurance costing $520.
• Lori leases a Honda Civic and her lease payment is $380 per month.
• The couple does not have children.
• Lori is still paying off her student loan which has a monthly payment of $130.
• Jeffs cell phone costs $85 per month and Loris cell phone cost $70 per month
• The couple does not have any other phone lines although they do have internet in the Condo which cost $85 per month
• Lori subscribes to a sewing magazine costing $30 per month and she has a membership at a fitness club costing $58 per month.
• Jeff reads the local newspaper costing $35 per month and he is a member of a golf club which costs $850 per year.
• The couple has a Visa with a limit of $10,000, a MasterCard with a limit of $10,000 and a Petro-Canada credit card with a limit of $2,000. There is nothing owing on any of the credit cards.
• The couple has a monthly savings plan set up with you and they have $250 taken out of their account every month and invested in an RRSP.
• The couple pays $2,400 per year insuring the 2 vehicles and they expect this to stay the same when they buy the new car.
• The couple has no other debts or bills outstanding

6. What is Jeff and Loris current combined TDSR?

1. 33.76%
2. 37.88%
3. 35.76%
4. 36.98%