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Roberto listed his assets and liabilities on a personal balance sheet.

\begin{tabular}{|c|c|c|c|}
\hline
\multicolumn{3}{|c|}{Roberto's Balance Sheet (September 2013)} \\
\hline
\multicolumn{2}{|c|}{Assets} & \multicolumn{2}{|c|}{Liabilities} \\
\hline
cash & \[tex]$1,800 & credit card & \$[/tex]4,000 \\
\hline
investments & \[tex]$6,200 & personal loan & \$[/tex]1,000 \\
\hline
house & \[tex]$150,000 & mortgage & \$[/tex]100,000 \\
\hline
car & \[tex]$8,000 & car loan & \$[/tex]5,000 \\
\hline
Total & & Total & \\
\hline
\end{tabular}

After creating the balance sheet, Roberto decided to use his investments to pay off his car loan. How will that decision affect the difference between his assets and liabilities?

A. It will make the assets \[tex]$5,000 less than the liabilities.
B. It will make the assets \$[/tex]5,000 more than the liabilities.
C. The difference between the assets and the liabilities will remain the same.
D. The difference between the assets and the liabilities cannot be compared.

Sagot :

GinnyAnsweridn
First, let's understand Roberto's initial financial situation by calculating his total assets and total liabilities:

Assets:
- Cash: \[tex]$1,800 - Investments: \$[/tex]6,200
- House: \[tex]$150,000 - Car: \$[/tex]8,000

Total Assets = \[tex]$1,800 + \$[/tex]6,200 + \[tex]$150,000 + \$[/tex]8,000 = \[tex]$166,000 Liabilities: - Credit Card: \$[/tex]4,000
- Personal Loan: \[tex]$1,000 - Mortgage: \$[/tex]100,000
- Car Loan: \[tex]$5,000 Total Liabilities = \$[/tex]4,000 + \[tex]$1,000 + \$[/tex]100,000 + \[tex]$5,000 = \$[/tex]110,000

Net Worth (Initial):
Net Worth = Total Assets - Total Liabilities
Net Worth (Initial) = \[tex]$166,000 - \$[/tex]110,000 = \[tex]$56,000 Next, Roberto decides to use his investments to pay off his car loan. This decision will affect his assets and liabilities as follows: Assets: - Cash remains \$[/tex]1,800
- Investments decrease by \[tex]$5,000 (since he uses it to pay the car loan) New Investments = \$[/tex]6,200 - \[tex]$5,000 = \$[/tex]1,200
- House remains \[tex]$150,000 - Car remains \$[/tex]8,000

New Total Assets = \[tex]$1,800 + \$[/tex]1,200 + \[tex]$150,000 + \$[/tex]8,000 = \[tex]$161,000 Liabilities: - Credit Card remains \$[/tex]4,000
- Personal Loan remains \[tex]$1,000 - Mortgage remains \$[/tex]100,000
- Car Loan is paid off, so it becomes \[tex]$0 New Total Liabilities = \$[/tex]4,000 + \[tex]$1,000 + \$[/tex]100,000 + \[tex]$0 = \$[/tex]105,000

Net Worth (Final):
Net Worth = Total Assets - Total Liabilities
Net Worth (Final) = \[tex]$161,000 - \$[/tex]105,000 = \[tex]$56,000 Finally, let's compare the initial and final net worth: Change in Net Worth = Net Worth (Final) - Net Worth (Initial) Change in Net Worth = \$[/tex]56,000 - \[tex]$56,000 = \$[/tex]0

Thus, the difference between Roberto's assets and liabilities remains the same.

Therefore, the answer to the question is:
"The difference between the assets and the liabilities will remain the same."
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