Megan purchased a new vehicle for $40,000. She put $5,000 down and financed the $35,000 balance over 5 years. What is the impact

Question

3 years ago

14

of this transaction on her net worth?

1 answer:

Zolol [24] · Answer 1 · 2022-09-22T16:35:57+03:00

Answer: c. Her net worth remains the same.

Explanation:

Her Net worth would be her assets less her liabilities.

Her added Assets would be the new vehicle less the amount she put down for it as this would reduce her cash holdings.

Her added liabilities would be the amount she owes from buying the car

= Net Assets - Liabilities

= ( 40,000 - 5,000 ) - 35,000

= $0

The addition to her Net Worth is zero so her net worth remains the same.