Question

Which of the following modifications to the list of assets and liabilities below would result in a positive net worth? Home owned $105,000. Mortgage owed $100,000. Car valued at $26,000. Car loan of $22,000. Investment fund of $4,500. Savings of $1,500. Credit card balance of $15,000. a. Lowering mortgage by $1,000. b. Increasing investment fund by $500. c. Adding $100 to savings. d. All of the above.

Answer 1

Net worth= assets-liability
NW=(105,000+26,000+4,500+1,500)−(100,000+22,000+15,000)=0
So the answer is all of the above
Why?

Answer 2

Assets here are : Home owned worth $105000, car owned worth $26000 , Investment fund worth $4500 and savings worth $1500

Liabilities are : mortgage owed worth $100000, car loan worth 22000 and credit card balance worth $15000

A positive net worth comes when total assets minus total liabilities are positive i.e more than zero.

Current net worth as per given scenario is :

`(105000+26000+4500+1500)-(100000+22000+15000)`

=
`137000-137000=0` (This gives zero net worth)

Checking option 1 - Lowering mortgage by $1000 , we get 137000-136000 = $ 1000 (positive net worth)

Checking option 2 - Increasing investment fund by $500 , we get 137500-137000 = $500 (positive net worth)

Checking option 3 - c. Adding $100 to savings , we get 137100-137000 = $100 (positive net worth)

Hence, all the options are correct.

D is the correct answer.