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To determine the effect of Roberto using his investments to pay off his car loan on the difference between his assets and liabilities, let's break down the solution step-by-step.
### Step 1: List and sum Roberto's initial assets and 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
### Step 2: Calculate the initial difference between assets and liabilities
Initial difference = Total Assets - Total Liabilities
Initial difference = \[tex]$166,000 - \$[/tex]110,000 = \[tex]$56,000 ### Step 3: Roberto decides to use his investments to pay off his car loan - Investments will decrease by the amount of the car loan: \$[/tex]6,200 - \[tex]$5,000 = \$[/tex]1,200 (Remaining investments)
- Car loan will become \[tex]$0: \$[/tex]5,000 - \[tex]$5,000 = \$[/tex]0
### Step 4: Calculate the new totals of assets and liabilities after paying off the car loan
New Assets:
- Cash: \[tex]$1,800 - Investments: \$[/tex]1,200 (after paying off the car loan)
- House: \[tex]$150,000 - Car: \$[/tex]8,000
New total assets = \[tex]$1,800 + \$[/tex]1,200 + \[tex]$150,000 + \$[/tex]8,000 = \[tex]$161,000 New Liabilities: - Credit card: \$[/tex]4,000
- Personal loan: \[tex]$1,000 - Mortgage: \$[/tex]100,000
- Car loan: \[tex]$0 (after paying off the car loan) New total liabilities = \$[/tex]4,000 + \[tex]$1,000 + \$[/tex]100,000 + \[tex]$0 = \$[/tex]105,000
### Step 5: Calculate the new difference between assets and liabilities
New difference = New Total Assets - New Total Liabilities
New difference = \[tex]$161,000 - \$[/tex]105,000 = \[tex]$56,000 ### Step 6: Determine the effect on the difference Compare the initial difference and the new difference: - Initial difference: \$[/tex]56,000
- New difference: \$56,000
Both differences are the same.
Therefore, the difference between the assets and the liabilities will remain the same. So, the correct answer is:
The difference between the assets and the liabilities will remain the same.
### Step 1: List and sum Roberto's initial assets and 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
### Step 2: Calculate the initial difference between assets and liabilities
Initial difference = Total Assets - Total Liabilities
Initial difference = \[tex]$166,000 - \$[/tex]110,000 = \[tex]$56,000 ### Step 3: Roberto decides to use his investments to pay off his car loan - Investments will decrease by the amount of the car loan: \$[/tex]6,200 - \[tex]$5,000 = \$[/tex]1,200 (Remaining investments)
- Car loan will become \[tex]$0: \$[/tex]5,000 - \[tex]$5,000 = \$[/tex]0
### Step 4: Calculate the new totals of assets and liabilities after paying off the car loan
New Assets:
- Cash: \[tex]$1,800 - Investments: \$[/tex]1,200 (after paying off the car loan)
- House: \[tex]$150,000 - Car: \$[/tex]8,000
New total assets = \[tex]$1,800 + \$[/tex]1,200 + \[tex]$150,000 + \$[/tex]8,000 = \[tex]$161,000 New Liabilities: - Credit card: \$[/tex]4,000
- Personal loan: \[tex]$1,000 - Mortgage: \$[/tex]100,000
- Car loan: \[tex]$0 (after paying off the car loan) New total liabilities = \$[/tex]4,000 + \[tex]$1,000 + \$[/tex]100,000 + \[tex]$0 = \$[/tex]105,000
### Step 5: Calculate the new difference between assets and liabilities
New difference = New Total Assets - New Total Liabilities
New difference = \[tex]$161,000 - \$[/tex]105,000 = \[tex]$56,000 ### Step 6: Determine the effect on the difference Compare the initial difference and the new difference: - Initial difference: \$[/tex]56,000
- New difference: \$56,000
Both differences are the same.
Therefore, the difference between the assets and the liabilities will remain the same. So, the correct answer is:
The difference between the assets and the liabilities will remain the same.
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