Reena wants to put together a net worth statement to share with her bank as she applies for a small loan. Showing your work for each step, construct a net worth statement based on the information she has gathered in the table. What does this mean for Reena’s chances of getting a loan? (2 points)
To construct a net worth statement, we need to calculate the total value of Reena's assets and the total value of her liabilities. The difference between the two will give us her net worth.
First, let's calculate the total value of her assets:
- Cash on hand: $500
- Savings account: $1,200
- Checking account: $800
- Car: $10,000
- Retirement account: $15,000
Total assets = $500 + $1,200 + $800 + $10,000 + $15,000 = $27,500
Next, let's calculate the total value of her liabilities:
- Credit card debt: $3,000
- Student loan: $7,500
Total liabilities = $3,000 + $7,500 = $10,500
Finally, let's calculate her net worth:
Net worth = Total assets - Total liabilities
Net worth = $27,500 - $10,500 = $17,000
Reena's chances of getting a loan will depend on various factors, including the lender's criteria and the specific terms of the loan she is applying for. However, having a positive net worth of $17,000 indicates that she has more assets than liabilities, which generally reflects financial stability and improves her chances of getting a loan.