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

Answer 1

Alright, so their assets are 10,000+150,000+34,000=194,000. Next, we get their liabilities to be 108,000+7,000=115,000. For their net worth to be 100,000, their assets have to be their liabilities (115,000)+100,000. Since their assets are 194,000 + a certain number (which we'll call x), 194,000+x=115,000+100,000=215,000. Subtracting 194,000 from both sides, we get x=21,000=C

Answer 2

$21000

Explanation:

Given : 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.

To Find : 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?

Solution :

Since The Roth family has liquid assets of $10,000, use assets of $150,000 and investment assets of $34,000.

So, their total assets = $10,000+$150,000 +$34,000. =$194,000

Also They also have liabilities totaling $108,000. If their total liabilities increase by $7,000 .

Then total liabilities = $108,000+$7,000=$115000

For their net worth to be 100,000, their assets have to be their liabilities (115,000)+100,000.

Let x be the increase their assets in order to have a net worth of $100,000

⇒$194,000+x=(115,000)+100,000.

⇒$194,000+x=215,000

⇒x=215,000-194,000

⇒x=21000

Thus Roth family need to increase $21000 in their assets in order to have a net worth of $100,000