Question

3. Nathan has a car loan of $2,000, a mortgage balance of $150,000 and

student loans of $15,000. If Nathan's debt ratio is 80%, what is Nathan's
net worth?

Answer 1

To calculate Nathan's net worth, we need to determine his total liabilities (debt) and subtract that from his total assets. The debt ratio tells us that Nathan's liabilities are 80% of his total net worth.

Total liabilities = Car loan + Mortgage + Student loans = $2,000 + $150,000 + $15,000 = $167,000

Nathan's net worth = Total assets = Total liabilities / Debt ratio = $167,000 / 0.8 = $208,750

So, Nathan's net worth is $208,750.