3
QuizMultiple Choice

Net Worth

Question 3 • 26-27 RPA Financial Math - MA2007 IC

Which of the following modifications to the list of assets and liabilities below would result in a negative net worth?House valued at $90,000.Mortgage owed $78,000.Car valued at $11,000.Car loan of $5,000.Student loan of $13,700.Stocks valued at $2,500.Savings of $3,000.

Answer
A
Net worth is already negative.
B
House value decreasing to $83,000.
C
Borrowing $10,000 more in student loans.
D
Selling off all owned stocks.

Explanation

The assets total $106,500, and the liabilities total $96,700, so the current net worth is $9,800. If student loans increase by $10,000 without adding an asset, net worth falls to −$200. Borrowing that amount would therefore make net worth negative; the other changes leave it positive or unchanged.

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