Suppose that Doug's only assets are an automobile worth $10,000 and a checking account with a $5,000 balance. His only liabilities are a student loan balance of $12,000 and a balance of $9,000 on his car loan. What is his net worth?

Question

Quizplus · Accepted Answer

Doug's net worth is calculated by subtracting his total liabilities from his total assets. His assets total $15,000 ($10,000 for the car and $5,000 in the checking account), and his liabilities total $21,000 ($12,000 student loan and $9,000 car loan). Therefore, his net worth is $15,000 - $21,000 = -$6,000, indicating he is insolvent.

Suppose That Doug's Only Assets Are an Automobile Worth $10,000