Question

Jasmine Smith owns a condo worth $240,000, a car valued at $25,000, and miscellaneous assets worth $7,500. She owes $185,000 on the condo and $15,000 on the car and has no other debts. Her retirement account, in which she is fully vested, contains $27,500 in mutual funds. She is insured with a $500,000 term life insurance policy. What is her net worth?

Answer 1

Answer:

The net worth is $100,000

Explanation:

The computation of net worth is shown below:

Net worth = Total assets - total liabilities

where,

Total assets = Condo + car + miscellaneous assets + mutual funds

                    = $240,000 + $25,000 + $7,500 + $27,500

                    = $300,000

And, the total liabilities equal to

= Owning a condo + car owned

= $185,000 + $15,000

= $200,000

Now put these values to the above formula

So, the answer would be equal to

= $300,000 - $200,000

= $100,000

The term life insurance policy is neither an asset nor a liability, so it would be not be considered in the computation part.