MATH SOLVE

2 months ago

Q:
# Julio has a house worth $220,000. He has a $175,000 mortgage. Julio says that in this situation, his asset is really only $45,000. Which statement explains whether Julio is correct? A. Julio is correct because the $45,000 equity in the house is the real asset. B. Julio is correct because he can pay $45,000 and have no more liabilities. C. Julio is not correct because the same item cannot represent both an asset and a liability. D. Julio is not correct because the house cannot be worth more than the mortgage.

Accepted Solution

A:

A.

He owes 175000, but the house is worth 220000

Equity (or an asset) is equal to how much something is worth minus how much you still owe

220000-175000 = 45000

He owes 175000, but the house is worth 220000

Equity (or an asset) is equal to how much something is worth minus how much you still owe

220000-175000 = 45000