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 for Reena, we need to calculate her net worth by subtracting her total liabilities from her total assets.
Total Assets:
Car: $24,728
Savings account: $3,589
Savings for retirement: $15,600
Total Liabilities:
Car loan: $3,000
Credit card balance: $762
Net Worth = Total Assets - Total Liabilities
Net Worth = (Car + Savings account + Savings for retirement) - (Car loan + Credit card balance)
Net Worth = ($24,728 + $3,589 + $15,600) - ($3,000 + $762)
Net Worth = $43,917 - $3,762
Net Worth = $40,155
Reena's net worth is $40,155.
Regarding Reena's chances of getting a loan, the net worth statement can provide important information to the bank. A higher net worth generally suggests a stronger financial position and may increase Reena's chances of getting a loan as it indicates that she has more assets than liabilities. However, other factors such as income, credit score, and debt-to-income ratio also play a significant role in the loan approval process.