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uity is the difference between an Asset's value and the loan balance.  For instance, if you have a car (the Asset) that is worth $30,000, but you owe (Liability) $25,000, then you have $5,000 of equity.   (Asset - Liability = Equity). If you borrow $30,000 for a vehicle at a 7% APR for 72 months, your payment is $511.47.  After two years, your car's Asset Value is $22,000.  If the car's value is $22,000, how much equity do you have in the car? Step 1: Calculate the balance that you owe after two years.  This is how much you still owe (the Liability). Step 2: Subtract the Liability from the Asset Value to find your Equity.  (Asset Value - Liability = Equity).           $3,953     $8,640     $837     $2,432     $640     $21,359

uity is the difference between an Asset's value and the loan balance.  For instance, if you have a car (the Asset) that is worth $30,000, but you owe (Liability) $25,000, then you have $5,000 of equity.   (Asset - Liability = Equity). If you borrow $30,000 for a vehicle at a 7% APR for 72 months, your payment is $511.47.  After two years, your car's Asset Value is $22,000.  If the car's value is $22,000, how much equity do you have in the car? Step 1: Calculate the balance that you owe after two years.  This is how much you still owe (the Liability). Step 2: Subtract the Liability from the Asset Value to find your Equity.  (Asset Value - Liability = Equity).           $3,953     $8,640     $837     $2,432     $640     $21,359

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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  1. Equity is the difference between an Asset's value and the loan balance.  For instance, if you have a car (the Asset) that is worth $30,000, but you owe (Liability) $25,000, then you have $5,000 of equity.   (Asset - Liability = Equity).

    If you borrow $30,000 for a vehicle at a 7% APR for 72 months, your payment is $511.47.  After two years, your car's Asset Value is $22,000.  If the car's value is $22,000, how much equity do you have in the car?

    Step 1: Calculate the balance that you owe after two years.  This is how much you still owe (the Liability).

    Step 2: Subtract the Liability from the Asset Value to find your Equity.  (Asset Value - Liability = Equity).  

     

     

       

    $3,953
       

    $8,640
       

    $837
       

    $2,432
       

    $640
       

    $21,359
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