Question

Valeria owns a condominium that is valued at $70,000. Her mortgage balance is $27,500. Valeria could sell her car for $16,710. She owes $6,790 for the car loan. She has a savings account balance of $7,725 and a checking account balance of $1,222. Valeria also has a student loan balance of $9,082 and a credit card balance of $1,456. Valeria made the incorrect net worth statement shown.

Answer 1

Valeria's net worth = fair market value of all her assets - fair market value of all her debts = ($70,000 + $16,710 + $7,725 + $1,222) - ($27,500 + $6,790 + $9,082 + $1,456) = $95,657 - $44,828 = $50,829

Personal net worth is similar to a company's equity. It represents an individual's current financial position.