Personal Finance: Turning Money into Wealth (7th Edition) (Prentice Hall Series in Finance)
Personal Finance: Turning Money into Wealth (7th Edition) (Prentice Hall Series in Finance)
7th Edition
ISBN: 9780133856439
Author: Arthur J. Keown
Publisher: PEARSON
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Chapter 2, Problem 1PA
Summary Introduction

To determine:

Net worth and affect of L’s age on net worth.

Introduction:

Net worth is that part of the assets that exceed liabilities. It is calculated by subtracting borrowing or debt from total assets.

Expert Solution & Answer
Check Mark

Explanation of Solution

Personal balance sheet of L:

Assets (What You Own)
Particulars Amount ($)
A House 90,000
B Automobile 20,000
C Furniture 10,000
D Total Assets (add lines A-C) 120,000
Liabilities or Debt (What You Owe)
E Current Bills 150
F Housing Loans 50,000
G Automobile Loans 4,000
H Total Liabilities (add lines E-G) 54,150
Net Worth
D Total Assets 120,000
H Less: Total Debt 54,150
I Equals: Net Worth(D-H) 65,850

Table (1)

Net worth of L is $65,850.

L’s age will not have any effect on his net worth.

Conclusion

Hence, the total net worth of L is $65,850.

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