Answered

IDNLearn.com: Your go-to resource for finding precise and accurate answers. Join our platform to receive prompt and accurate responses from experienced professionals in various fields.

Assets - Liabilities = Equity

Assets are things you own. Liabilities are things you owe. Equity is your net worth.

Robin is a computer programmer who works from home. They use transit instead of a car and love to travel the world. They went to an elite university. Last year, Robin made [tex]$\$[/tex] 120,000[tex]$ and spent $[/tex]\[tex]$ 115,000$[/tex].

Robin Moote's Financial Information

\begin{tabular}{|l|l|l|l|}
\hline
\multicolumn{2}{|c|}{Assets} & \multicolumn{2}{|c|}{Liabilities} \\
\hline
House & [tex]$\$[/tex] 475,000[tex]$ & Mortgage & $[/tex]\[tex]$ 400,000$[/tex] \\
\hline
Computers & [tex]$\$[/tex] 7,000[tex]$ & Student Loan & $[/tex]\[tex]$ 90,000$[/tex] \\
\hline
Investments & [tex]$\$[/tex] 6,000[tex]$ & Line of Credit & $[/tex]\[tex]$ 4,000$[/tex] \\
\hline
& & Mastercard & [tex]$\$[/tex] 12,000$ \\
\hline
TOTAL & & TOTAL & \\
\hline
\end{tabular}

1) What is Robin's net worth?
2) What would you recommend they change about their financial habits?

Sagot :

GinnyAnsweridn
To determine Robin's net worth and provide financial advice, we will go through several steps.

### Step 1: Calculate Total Assets
Total assets are the combined value of all the things Robin owns. In this case, the assets are:
- House: [tex]$475,000 - Computers: $[/tex]7,000
- Investments: [tex]$6,000 Sum these values to find the total assets: \[ \text{Total Assets} = \$[/tex]475,000 + \[tex]$7,000 + \$[/tex]6,000 = \[tex]$488,000 \] ### Step 2: Calculate Total Liabilities Total liabilities are the combined value of all the debts Robin owes. In this case, the liabilities are: - Mortgage: $[/tex]400,000
- Student Loan: [tex]$90,000 - Line of Credit: $[/tex]4,000
- Mastercard: [tex]$12,000 Sum these values to find the total liabilities: \[ \text{Total Liabilities} = \$[/tex]400,000 + \[tex]$90,000 + \$[/tex]4,000 + \[tex]$12,000 = \$[/tex]506,000 \]

### Step 3: Calculate Net Worth (Equity)
Net worth, or equity, is calculated by subtracting total liabilities from total assets:
[tex]\[ \text{Equity} = \text{Total Assets} - \text{Total Liabilities} \][/tex]
[tex]\[ \text{Equity} = \$488,000 - \$506,000 = -\$18,000 \][/tex]

So, Robin's net worth is [tex]\(-\$18,000\)[/tex].

### Financial Recommendations
1. Debt Reduction Plan: Robin has significant liabilities, especially the mortgage and student loan. Developing a strategic debt repayment plan, possibly with the help of a financial advisor, can help reduce high-interest debts more quickly.

2. Budget Adjustment: Although Robin's income is quite high, they are also spending a substantial amount annually. Reviewing their spending habits and cutting down unnecessary expenses can free up funds to pay off debts and increase savings.

3. Increase Savings: Setting up an emergency fund and regular savings plan can help build a financial cushion that improves net worth over time. Even small, consistent contributions can grow significantly due to the power of compounding interest.

4. Invest Wisely: If there is any disposable income after addressing immediate debts, consider investing in low-risk options or retirement funds to increase assets gradually.

By implementing these changes, Robin can work towards improving their net worth and achieving better financial stability.
We appreciate every question and answer you provide. Keep engaging and finding the best solutions. This community is the perfect place to learn and grow together. For trustworthy answers, rely on IDNLearn.com. Thanks for visiting, and we look forward to assisting you again.