3. You happen to have $2,000 in a bank account, $12,800 in a 401(k) plan at...

3. You happen to have $2,000 in a bank account, $12,800 in a 401(k) plan at work, a fully owned car with a current value of $8,000, and a house that you purchased for $250,000 that has a current market value of $378,000. The current balance of your home mortgage is $121,000, you have one credit card with a $5,000 balance, and a school loan with a balance of $67,000. What is your current net worth?

Solutions

Expert Solution

Net worth is the amount by which assets exceeds liabilities

In the question, we have given assets and liabilities, first we need to differentiate which one are assets and which are liabilities

Now, we are finding assets

Assets:

Bank account
Amount in 401(k) plan - It is the amount in pension fund, which would be an asset
Car
House

Liabilities:

Home mortgage
Credit card balance
School loan

Now we will add all the assets -

Bank account = $2,000

401(k) Balance = $12,800

Car value = $8,000

Current value of house = $378,000

Total assets = Bank account + 401(k) balance + car + home value = 2000 + 12800 + 8000 + 378000 = $400,800

Now, we will add liabilities -

Home mortgage= $121,000

Credit card balance = $5,000

School Loan Balance = $67,000

Total Liabilities = home mortgage + credit card balance + school loan balance = 121000+5000+67000 = $193,000

Net Worth = Total Assets - Total Liabilities = 400,800 - 193,000 = $207,800

So, net worth is $207,800

jeff jeffy answered 1 year ago

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