Question

In: Finance

Vaughn has a net worth of $2,500. If Vaughn has a total of $2,000 of liquid...

Vaughn has a net worth of $2,500. If Vaughn has a total of $2,000 of liquid assets, $4,000 of personal possessions, and student loans totaling $2,500, how much does she owe on her credit card bills? Assume that Vaughn has no other assets or liabilities.

The Schaeffer family wants to increase their savings ratio next year. Their current savings ratio is 5%. If the family makes a combined income of $60,000, and they want their savings ratio to be 10% next year, how much are they planning to save (in dollars)?

Nathan has a car loan of $4,000, a mortgage balance of $90,000 and student loans of $5,000. If Nathan's debt ratio is 40%, what is Nathan's net worth?

The Fountain family has current liabilities of $5,000 and a current ratio of 1.5. What are their liquid assets?

Ryan has monthly expenses of $5,000 and a liquidity ratio of 2.2. What are Ryan's liquid assets?

Chip has credit payments of $5,000 per month and has a debt-payments ratio of .8. How much does Chip have in take-home pay each month?

Solutions

Expert Solution

The formula of Net worth is as below:

Net worth = Total assets - Total liabilities

Total assets = $2,000 + $4,000 = $6,000

Total liabilities = $2,500 + Credit card bill

Net worth = $2,500

$2,500 = $6,000 - ($2,500 + credit card bill)

$2,500 = $6,000 - $2,500 - credit card bill

Credit card bill = $6,000 - $2,500 - $2,500 = $1,000

So, credit card bill is $1,000.

Schaeffer Family are planning to save $6,000 calculated as below:

Savings ratio = Savings/total income

10% = Savings/$60,000

Savings = $60,000*10% = $6,000

Nathan's debt ratio is 40%. the formula of debt ratio is as below:

debt ratio = total liabilities/total assets

Total liabilities = $4,000 + $90,000 + $5,000 = $99,000

40% = $99,000/Total assets

Total assets = $99,000/40% = $247,500

Net worth = Total assets - Total liabilities

Nathan's net worth = $247,500 - $99,000 = $148,500

Fountain family's liquid assets can be calculated as below using formula of current ratio:

Current ratio = current assets/current liabilities

1.5 = current Assets/$5,000

Current assets = $5,000*1.5 = $7,500

There is a difference between current assets and liquid assets. Current assets include cash and bank balance, debtors, short-term investments, bills receivable, inventory and prepaid expenses whereas liquid assets is current assets - inventory - prepaid expenses.

In the question inventory and prepaid expenses are not given. So, we assume Fountain family's current assets are their liquid assets which is $7,500.

Ryan's liquid assets are calculated as below:

liquid ratio = liquid assets/current liabilities

2.2 = liquid assets/$5,000

Ryan's liquid assets = $5,000*2.2 = $11,000

Chip have in take-home pay each month of $6,250 calculated as below:

debt-payments ratio = monthly debt payments/gross monthly income

0.8 = $5,000/gross monthly income

gross monthly income = $5,000/0.8 = $6,250


Related Solutions

Use the following items to determine the total assets, total liabilities, net worth, total cash inflows,...
Use the following items to determine the total assets, total liabilities, net worth, total cash inflows, and total cash outflows. Rent for the month $ 1,450 Monthly take-home salary $ 2,985 Spending for food $ 745 Cash in checking account $ 610 Savings account balance $ 2,050 Balance of educational loan $ 3,120 Current value of automobile $ 9,500 Telephone bill paid for month $ 145 Credit card balance $ 315 Loan payment $ 240 Auto insurance $ 390 Household...
Joshua and Tiffany have a net worth of $25,000 and total assets of $140,000. They have...
Joshua and Tiffany have a net worth of $25,000 and total assets of $140,000. They have credit card and other monthly bills of $2,200. You are preparing their Balance Sheet. What are their total liabilities? On an income and expense statement covering January 1 to June 30, Which one of the following would not be included as income. wages and salaries received in that six months interest received on June 30 auto sold with payment received May 15 inheritance granted...
1. An investor puts $2,000 into an investment that will pay $2,500 one-fourth of the time;...
1. An investor puts $2,000 into an investment that will pay $2,500 one-fourth of the time; $2,000 one-half of the time, and $1,750 the rest of the time. What is the investor's expected return? 2. An investment will pay $2000 a quarter of the time; $1,600 half of the time and $1,400 a quarter of the time. The standard deviation of this asset is: 3. Investment A pays $1,200 half of the time and $800 half of the time. Investment...
6. A project has the following total (or net) cash flows. __________________________________________ Year Total (or net)...
6. A project has the following total (or net) cash flows. __________________________________________ Year Total (or net) cash flow _________________________________________ 1- $20,000 2- 30,000 3- 50,000 4- 60,000 _________________________________________ The required rate of return on the project is 15 percent. The initial investment (or initial cost or initial outlay) of the project is $80,000. a) Find the net present value (NPV) of the project. b) Find the profitability index (PI) of the project. c) Calculate the modified internal rate of return...
You have a salary of $35,000, an RPP deduction of $2,500, paid $2,000 interest on your...
You have a salary of $35,000, an RPP deduction of $2,500, paid $2,000 interest on your mortgage and paid union dues of $700. If the basic personal amount is $11,635 and the federal tax rate is 15 percent, what federal tax do you owe? 1)3025 2)2259 3)2829 4)2335
Joanne has provided you with her net worth statement and has told you her monthly net...
Joanne has provided you with her net worth statement and has told you her monthly net income is $5,000 and monthly expenses are $3,800. Assets: Chequing account $7,200 Non-registered money market fund $15,000 (emergency savings) TFSA Account $69,500 (savings for down payment on a home) Car $20,000 Liabilities: Credit card debt $1,000 Student loan $41,000 Using the information she provided you, calculate her liquidity ratio. Your answer should be a whole number, to two decimal places.
Palawan Financing has total assets worth $900 million and total liabilities worth $475 million at the end of December 31, 2016
34. Palawan Financing has total assets worth $900 million and total liabilities worth $475 million at the end of December 31, 2016. What is the amount of money received by the stockholders, if Palawan Financing liquidates all of its assets for $850 and pays off all of its outstanding debt?a.$850 millionb.$475 millionc.$1,325 milliond.$425 millione.$375 million43. Anton is considering putting money in an investment plan that will pay him $52,000 in 12 years. If Anton's opportunity cost rate is 7 percent...
Given the following financial data, complete the balance sheet below: Total debt to net worth 1...
Given the following financial data, complete the balance sheet below: Total debt to net worth 1 to 1 Quick ratio 1.5 to 1 Asset turnover 1.5 times Average collection period 48.67 days sales/inventory 7.5times Cash ___________ Receivables ___________ Inventories __________ Net plant ______________ Total assets _____ Notes Payable _________ Long term debt $30,000 Common stock 20,000 Retained earnings 30,000 Total debt & equity
Given the following financial data, complete the balance sheet below: Total debt to net worth 1...
Given the following financial data, complete the balance sheet below: Total debt to net worth 1 to 1 Quick ratio 1.5 to 1 Asset turnover 1.5 times Average collection period 48.67 days sales/inventory 7.5times Cash ___________ Receivables ___________ Inventories __________ Net plant ______________ Total assets _____ Notes Payable _________ Long term debt $20,000 Common stock 15,000 Retained earnings 25,000 Total debt & equity
In 1913, Andrew Carnegie's net worth was approximately $475 million. In 2018, Mark Zuckerberg’s net worth...
In 1913, Andrew Carnegie's net worth was approximately $475 million. In 2018, Mark Zuckerberg’s net worth was $58 billion. One dollar ($1) in January of 1913 has the same buying power as $25.76 in September of 2018. What is the real wealth for Andrew Carnegie in 1913? a. 2.5b units of goods and services b. 1.5b units of goods and services c. 768m units of goods and services d. 475m units of goods and services e. 2.25b units of goods...
ADVERTISEMENT
ADVERTISEMENT
ADVERTISEMENT