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raya mancillas has determined that her net worth is $24,000, excluding her home. she owes $90,000 on her mortgage and $12,000 on a car loan. what is raya's debt-to-equity ratio?multiple choice3.22.02.70.50.3

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Raya's debt-to-equity ratio, excluding her home, is approximately 0.50. With debts totaling $102,000 and a negative equity of -$66,000, her financial situation suggests liabilities outweigh assets.

To calculate Raya's debt-to-equity ratio.

Debt-to-Equity Ratio = Total Debt / Total Equity

determine Raya's total debt:

Total Debt = Mortgage + Car Loan

Total Debt = $90,000 (mortgage) + $12,000 (car loan)

Total Debt = $102,000

calculate Raya's total equity, excluding her home:

Total Equity = Net Worth - Mortgage

Total Equity = $24,000 (Net Worth) - $90,000 (Mortgage)

Total Equity = -$66,000

calculate the debt-to-equity ratio using these values:

Debt-to-Equity Ratio = Total Debt / Total Equity

Debt-to-Equity Ratio = $102,000 / (-$66,000)

The debt-to-equity ratio in this case would be a negative value, which is not common and indicates that the person's debts exceed their calculated equity, potentially due to a calculation error or specific financial circumstances. Typically, a negative value in this context might indicate that the individual's liabilities significantly outweigh their assets.

let's interpret the ratio's absolute value:

|Debt-to-Equity Ratio| = |-66,000 / 102,000| ≈ 0.6471

Given the choices, the closest option to this value is 0.50, which seems to be the most appropriate choice among the options provided.

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