Mr. Chavez has assets of $250,000 and liabilities of $18,000. He decides to finance the entire amount of the purchase of a car valued at $26,000. Which of the following is true?

Financing the car adds a $26,000 car to Mr. Chavez’s assets and a $26,000 loan to his liabilities. His assets increase, but his net worth (assets minus liabilities) does not change because both rise by the same amount. The true statement is that Mr. Chavez increased his assets.

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