Question

Robert Sampson owns a townhouse valued at $185,000 and still has an unpaid mortgage of $150,000. In addition to his mortgage, he has the following liabilities:

Visa $ 755
MasterCard 380
Discover card 555
Education loan 3,900
Personal bank loan 650
Auto loan 6,000
Total $ 12,240
Robertâs net worth (not including his home) is about $39,000. This equity is in mutual funds, an automobile, a coin collection, furniture, and other personal property.
Required:
a. What is Robertâs debt-to-equity ratio?

Answer 1

0.31

Step-by-step explanation:

Given that,

Visa = $ 755

MasterCard = 380

Discover card = 555

Education loan = 3,900

Personal bank loan = 650

Auto loan = 6,000

Total debt (not including mortgage) = $12,240

Net Worth (not including home) = $39,000

Robert's debt-to-equity ratio:

= Total debt ÷ Net worth

= $12,240 ÷ $39,000

= 0.31