Question

Portia leased a car with a fair market value of $36,000 and has paid $12,000 in payments. How much equity has Portia built since the car was first leased

Answer 1

Answer: $0

Step-by-step explanation:

Equity is a term that refers to ownership. Portia can therefore only build equity on a car that Portia owns. In this scenario Portia has only leased the vehicle and so builds no equity in it as it will have to be returned to the lessor.

If however Portia had purchased the car, Portia would have built up equity of $12,000 which is the amount Portia has paid on the car so far.