Jordan has the following assets and liabilities: $$\begin{array} { l l r }
\text { Two cars } & \$ 10,000 \
\text { House } & \$ 200,000 \
\text { Mortgage } & \$ 100,000 \
\text { Cash } & \$ 1,000 \
\text { Car loans } & \$ 3,000 \
\text { Checking account balance } & \$ 2,000 \
\text { Credit card balance } & \$ 1,000
\end{array}$$ Suppose that Jordan wins $100,000 in the lottery. If he uses that money to pay off his mortgage, his wealth would ______; if he puts that money in his checking account, his wealth would ______.
A) increase to $209,000; not change
B) not change; increase to $207,000
C) increase to $209,000; increase to $209,000
D) increase to $207,000; not change

Question

Jordan has the following assets and liabilities: $$\begin{array} { l l r } 
\text { Two cars } & \$ 10,000 \
\text { House } & \$ 200,000 \
\text { Mortgage } & \$ 100,000 \
\text { Cash } & \$  1,000 \
\text { Car loans } & \$ 3,000 \
\text { Checking account balance } & \$  2,000 \
\text { Credit card balance } & \$  1,000
\end{array}$$ Suppose that Jordan wins $100,000 in the lottery. If he uses that money to pay off his mortgage, his wealth would ______; if he puts that money in his checking account, his wealth would ______.
A) increase to $209,000; not change
B) not change; increase to $207,000
C) increase to $209,000; increase to $209,000
D) increase to $207,000; not change

Quizplus · Accepted Answer

If Jordan uses the money to pay off his mortgage, his wealth would increase to $209,000 (assets of $213,000 minus liabilities of $4,000). If he puts the money in his checking account, his wealth would also increase to $209,000 (assets of $214,000 minus liabilities of $5,000).

Jordan Has the Following Assets and Liabilities Suppose That Jordan Wins $100,000 in the Lottery