uity is the difference between an Asset's value and the loan balance. For instance, if you have a car (the Asset) that is worth $30,000, but you owe (Liability) $25,000, then you have $5,000 of equity. (Asset - Liability = Equity). If you borrow $30,000 for a vehicle at a 7% APR for 72 months, your payment is $511.47. After two years, your car's Asset Value is $22,000. If the car's value is $22,000, how much equity do you have in the car? Step 1: Calculate the balance that you owe after two years. This is how much you still owe (the Liability). Step 2: Subtract the Liability from the Asset Value to find your Equity. (Asset Value - Liability = Equity). $3,953 $8,640 $837 $2,432 $640 $21,359

uity is the difference between an Asset's value and the loan balance. For instance, if you have a car (the Asset) that is worth $30,000, but you owe (Liability) $25,000, then you have $5,000 of equity. (Asset - Liability = Equity). If you borrow $30,000 for a vehicle at a 7% APR for 72 months, your payment is $511.47. After two years, your car's Asset Value is $22,000. If the car's value is $22,000, how much equity do you have in the car? Step 1: Calculate the balance that you owe after two years. This is how much you still owe (the Liability). Step 2: Subtract the Liability from the Asset Value to find your Equity. (Asset Value - Liability = Equity). $3,953 $8,640 $837 $2,432 $640 $21,359

Financial Accounting: The Impact on Decision Makers

10th Edition

ISBN:9781305654174

Author:Gary A. Porter, Curtis L. Norton

Publisher:Gary A. Porter, Curtis L. Norton

Chapter9: Current Liabilities, Contingencies, And The Time Value Of Money

Section: Chapter Questions

Problem 9.21MCE

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