Assets Value
Car $24,728
Savings account $3,589
Savings for retirement $15,600
Total Assets
Liabilities Balance Owed
Car loan $3,000
Credit card balance $762
Total Liabilities
Net Worth
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??
To construct a net worth statement, we need to subtract the total liabilities from the total assets.
Total Assets = Car ($24,728) + Savings account ($3,589) + Savings for retirement ($15,600)
= $24,728 + $3,589 + $15,600
= $43,917
Total Liabilities = Car loan ($3,000) + Credit card balance ($762)
= $3,000 + $762
= $3,762
Net Worth = Total Assets - Total Liabilities
= $43,917 - $3,762
= $40,155
Reena's net worth is $40,155.
Regarding her chances of getting a loan, a higher net worth generally increases the likelihood of being approved for a loan. In Reena's case, her net worth of $40,155 indicates that she has significant assets compared to her liabilities. This can be seen as a positive factor by the bank when considering her loan application, as it indicates that she has a good financial position and is capable of managing her debts. However, the final decision on the loan will depend on other factors such as her credit history, income, and the specific requirements of the bank she is applying to.