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

Vehicles are purchased by the loans these are paid monthly and very easy to pay and these monthly…

Answered: uity is the difference between an…

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

Related questions

Question

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