Ch 03: End-of-Chapter Problems - Financial Statements, Tools, and Budgets . , , their children drive, go to college, and leave home and go out in the world on their own. Victor and Maria also recognize the need to further prepare for their retire challenges of aging. Victor and Maria spent some time making up their first balance sheet, which is shown in the table. 650 Balance Sheet for a couple with Two Children-Victor and Maria Hernandez, January 1, 2018 Dollars Percent ASSETS Monetary Assets Cash on hand 1,200 0.3% Savings account 4,200 1.1% Victor's checking account 2,700 0.7% Maria's checking account 3,300 0.8% Tax refund due 700 0.2% Rent receivable 0.2% Total Monetary Assets $ 12,750 3.2% Tangible Assets Home 192,000 48.9% Personal property 9,000 2.3% Automobiles 9,500 2.4% Total Tangible Assets $210,500 53.6% Investment Assets Fidelity mutual funds 5,000 1.3% Scudder mutual fund 5,500 1.4% Ford Motor Company stock 2,700 0.7% New York 2038 bonds 4,000 1.0% Life insurance cash value 5,600 1.4% IRA accounts 34,500 8.8% Real estate Investment 112,000 28.5% Total Investment Assets $169,300 43.1% Total Assets $392,550 100.0% LIABILITIES Short-Term liabilities Dentist bill 220 0.1% Credit card debt 1,700 0.4% Total Short-term Liabilities $ 1,920 0.5% Long-Term liabilities Vehicle loan 8,600 2.2% Home mortgage loan 92,400 23.5% Total long-term liabilities $101,000 25.7% Total Liabilities $102,920 26.2% Net Worth $289,630 73.8% Total Liabilities and Net Worth $392,550 100.0% 1.3% 1.4% 0.7% 1.0% 1.4% 8.8% 28.5% 43.1% 100.0% Ch 03: End-of-Chapter Problems - Financial Statements, Tools, and Budgets Fidelity mutual funds 5,000 Scudder mutual fund 5,500 Ford Motor Company stock 2,700 New York 2038 bonds 4,000 Life insurance cash value 5,600 TRA accounts 34,500 Real estate investment 112,000 Total Investment Assets $169,300 Total Assets $392,550 LIABILITIES Short-Term liabilities Dentist bill 220 Credit card debt 1,700 Total Short-term Liabilities $ 1,920 Long-Term liabilities Vehicle loan 8,600 Home mortgage loan 92,400 Total long-term liabilities $101,000 Total Liabilities $107.920 Net Worth $289,630 Total Liabilities and Net Worth $392,550 0.196 0.4% 0.5% 2.2% 23.5% 25.7% 26.2% 73.8% 100.0% Victor and Maria are a bit confused about how various financial activities can affect their net worth. a. Assume that their home is now appraised at $200,000 and the value of their automobile has dropped to $8,500. Calculate and characterize the effects of these changes on their net worth. Round your answer to the nearest dollar Net worth would -Select- by $ because the value of the real estate rose -Select- the value of the car declined. Calculate the effects of these changes on their asset-to-debt ratio. Round your answers to three decimal places. Old asset-to-debt ratio: New asset-to-debt ratio: b. If Victor and Maria take out a bank loan for $1,700 and pay off their credit card debts totaling $1,700, what effects would these changes have on their net worth? Taking out a bank loan to pay off the credit card liability would -Select the Hernandezs' net worth. c. If Victor and Maria sell their New York 2038 bond and put the cash into the savings account, what effects would this have on their net worth and liquidity ratio? Assume their annual expenses are $82,773. Round your answers to three decimal places. Selling the New York bond would -Select the Hernandezs' net worth The liquidity ratio would -Select- y from to
