Presentation on theme: "Constructing a Net Worth Statement"— Presentation transcript:
1 Constructing a Net Worth Statement 14.3Constructing a Net Worth StatementHow do you create a net worth statement?
2 ADDITIONAL EXAMPLE 1Andy paid off his car, which is worth $8,000. He owes 6 monthly installments of $85 each for his sound system. He pays $75 per month for his cable service, and his contract lasts 1 year. He has $472 in his checking account and $2,735 in his savings account. Andy also owes $446 on his credit card. His electronic appliances are valued at $2,075. His share of the rent and utilities for the apartment he shares with a roommate is $545 per month, and his lease lasts for another 8 months. What is Andy’s current net worth?$7,066
3 14.3 LESSON QUIZ7.13.CStan owns his scooter, which is worth $3,100. He owes 6 monthly payments of $35 each for his stereo. He pays $45 per month for his cell phone, and his current contract lasts for 1 year. He has $463 in his checking account and $1,375 in savings. Stan also owes $345 on his credit card. His vintage guitar is valued at$2,100. His part of the rent and utilities for the apartment he shares is $450 per month, and the lease lasts for another 8 months.
4 1.What are Stan’s total assets?$7,0382.What are Stan’s total liabilities?$4,6953.What is his current net worth?$2,343
5 Angela pays for a flat-screen television with her credit card Angela pays for a flat-screen television with her credit card. The value of the television is $1,300. She pays cash for a new computer. The value of the computer is $2,100.4.Is the television an asset or a liability?The television is a liability because Angela owes money for it, having paid for it with her credit card.5.Is the computer an asset or a liability? Explain.The computer is an asset because she owns it, having paid for it with cash.
6 Evan owes 6 monthly payments of $135 each for his motorcycle Evan owes 6 monthly payments of $135 each for his motorcycle. When he bought the motorcycle 3 years ago, he paid $5,500 for it. He pays $50 per month for his cell phone and has 1 year remaining on his contract. He has $686 in his checking account and $1,200 in savings. He owes $637 on his credit card. His rent is $425 per month, and his lease lasts for another 5 months. Evan calculated his net worth to be $4,024. Part of the table he made to calculate his net worth is shown below. Did Evan find his net worth correctly? Explain.
7 No. Evan does not own the motorcycle, so it should be listed as a liability and not as an asset. The amount of the liability is 6 × $135 = $810. His reasoning is incorrect because he will not be able to sell it for the $5,500 he paid 3 years ago. He would need to do some research to find the current value of the motorcycle; that amount can be counted as an asset. His current net worth could then be calculated.
8 How do you create a net worth statement? Sample answer:Find the cash value of all your assets and the cash value of all your liabilities. Subtract your total liabilities from your total assets to get your net worth.