Jordan has the following assets and liabilities: Suppose that Jordan wins $100,0
ID: 1208014 • Letter: J
Question
Jordan has the following assets and liabilities:
Suppose that Jordan wins $100,000 in the lottery. If he uses that money to pay off his mortgage, his wealth would ______; if he puts that money in his checking account, his wealth would ______.
A. stay the same;stay the same
increase to $209,000;increase to $209,000
increase to $207,000; increase to $207,000
stay the same;increase to $209,000
Two Cars $10,000 House $200,000 Mortgage $100,000 Cash $1,000 Car Loans $3,000 Checking Account Balance $2,000 Credit Card Balance $1,000Explanation / Answer
Increase to $209,000, increase to $209,000 is answer
Jordan’s wealth before win is $109,000. His assets are two cars, a house, cash and a checking account balance whichtotal $213,000. His liabilities are a mortgage, car loans and a credit card balance which total $104,000. The difference is his wealth.
Now he has won $100,000 and if he pays the entire mortage, his liability will decline to 4,000, and as there will be no change in assets, the wealth will increase by 100,000 to $209,000
if he puts in checking account, then his assets will increase by 100,000 to $313,000 and liability will remain at 104,000, then the wealth will increase by $100,000 to $209,000
increase to $209,000;increase to $209,000
increase to $209,000;increase to $209,000
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