Question

The Roth family has liquid assets of $10,000, use assets of $150,000 and investment assets of $34,000. They also have liabilities totaling $108,000. If their total liabilities increase by $7,000 over the next year, by how much would the Roth family need to increase their assets in order to have a net worth of $100,000?

a.
$7,000
b.
$14,000
c.
$21,000
d.
$28,000


Please select the best answer from the choices provided

A
B
C

Answer 1

The answer is C $21,000

Answer 2

c. $21,000

Explanation:

In this situation, Net worth can be defined as total assets minus liabilities, in the initial situation, the family's net worth is defined as the sum of liquid assets, use assets and investment assets minus liabilities:

`Net = 150,000+10,000+34,000 - 108000\\Net = 86,000`

If liabilities increase by $7,000, their new net worth would be $79,000.

Therefore, they would need to increase their assets by $21,000 in order to achieve a net worth of $100,000