Question

what is mikes roi Mike Smith has the following financial data. Investment Assets at Year End $475,000 Investment Assets at Beginning of the Year $392,000 Savings Made During the Year by Mike $27,000 Employer Match to Mike's 401(k) Plan $5,000 Total Assets on Ending Statement of Financial Position $700,000 Gross Income on Income Statement $100,000 Total Assets on Beginning Statement of Financial Position $600,000 Total Liabilities at Beginning of the Year $200,000 Total Liabilities at Year End $180,000

Answer 1

Answer:

Mike's return for the net worth of the year is 22.00%

Explanation:

Total Net Worth =  Assets  -  Liabilities

In the start,  

• Net Worth  =  600,000  -  200,000  =  400,000

At end of year,  

• Net Worth  =  700,000  -  180,000  =  520,000

The Contribution made (During the year)  =  27,000 +  5,000 =  32,000

Therefore,  

Return on the Net Worth =  ( 520,000  -  32,000 )  /  400,000  -  1 = 22.00%