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19 February, 07:47

Jasmine Smith owns a condo worth $240,000, a car valued at $25,000, and miscellaneous assets worth $7,500. She owes $185,000 on the condo and $15,000 on the car and has no other debts. Her retirement account, in which she is fully vested, contains $27,500 in mutual funds. She is insured with a $500,000 term life insurance policy. What is her net worth?

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  1. 19 February, 08:14
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    The net worth is $100,000

    Explanation:

    The computation of net worth is shown below:

    Net worth = Total assets - total liabilities

    where,

    Total assets = Condo + car + miscellaneous assets + mutual funds

    = $240,000 + $25,000 + $7,500 + $27,500

    = $300,000

    And, the total liabilities equal to

    = Owning a condo + car owned

    = $185,000 + $15,000

    = $200,000

    Now put these values to the above formula

    So, the answer would be equal to

    = $300,000 - $200,000

    = $100,000

    The term life insurance policy is neither an asset nor a liability, so it would be not be considered in the computation part.
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