Question

the assets and liabilities of a credit union banker are listed below.

car value	$29,850
car loan	$10,560
savings account balance	$12,409
treasury bonds	$10,000
student loans	$13,824
credit card balance	$8,051
checking account balance	$19,419
home value	$194,450

what is the total net worth if the banker pays off the student loans?

• $219,869
• $247,517
• $233,693
• $252,304

Explanation:

Classify assets and liabilities

Assets:

• Car Value: \(\$29,850\)
• Savings Account Balance: \(\$12,409\)
• Treasury Bonds: \(\$10,000\)
• Checking Account Balance: \(\$19,419\)
• Home Value: \(\$194,450\)

Liabilities:

• Car Loan: \(\$10,560\)
• Student Loans: \(\$13,824\)
• Credit Card Balance: \(\$8,051\)

Calculate total assets and liabilities

$$ \text{Total Assets} = 29850 + 12409 + 10000 + 19419 + 194450 = 266128 $$

$$ \text{Total Liabilities} = 10560 + 13824 + 8051 = 32435 $$

Calculate net worth

Paying off the student loans uses \(\$13,824\) of cash (reducing assets) to eliminate \(\$13,824\) of debt (reducing liabilities). The net worth remains unchanged:

$$ \text{Net Worth} = \text{Total Assets} - \text{Total Liabilities} $$

$$ \text{Net Worth} = 266128 - 32435 = 233693 $$

Answer:

• (A) $219,869
• (B) $247,517
• (C) $233,693 (Correct answer)
• (D) $252,304