QuestionMay 31, 2025

Based on the following scenario, what is your net worth in 10 years (Year 10 in the graph)? Annual asset growth: 20% . Annual liability growth: 1% . Total Assets: 563,500. Total Liabilities: 288,000. Between 2,300,001 and 2,400,000 Between 2,400,001 and 2,500,000 Between 2,500,001 and 2,600,000 Between 2,600,001 and 2,700,000

Based on the following scenario, what is your net worth in 10 years (Year 10 in the graph)? Annual asset growth: 20% . Annual liability growth: 1% . Total Assets: 563,500. Total Liabilities: 288,000. Between 2,300,001 and 2,400,000 Between 2,400,001 and 2,500,000 Between 2,500,001 and 2,600,000 Between 2,600,001 and 2,700,000
Based on the following scenario, what is your net worth in 10 years (Year 10 in the graph)? Annual asset growth: 20% . Annual liability growth: 1% . Total Assets: 563,500. Total Liabilities: 288,000. Between 2,300,001 and 2,400,000 Between 2,400,001 and 2,500,000 Between 2,500,001 and 2,600,000 Between 2,600,001 and 2,700,000

Solution
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Answer

Between \2,900,001 and \3,000,000 Explanation 1. Calculate Future Assets Use the formula for compound growth: A = P(1 + r)^t. Here, P = 563,500, r = 0.20, and t = 10. A = 563,500 \times (1 + 0.20)^{10} = 563,500 \times 6.1917364224 \approx 3,487,000 2. Calculate Future Liabilities Use the formula for compound growth: L = P(1 + r)^t. Here, P = 288,000, r = 0.01, and t = 10. L = 288,000 \times (1 + 0.01)^{10} = 288,000 \times 1.104622125 \approx 318,530 3. Calculate Net Worth Subtract future liabilities from future assets: Net\ Worth = A - L = 3,487,000 - 318,530 = 3,168,470

Explanation

1. Calculate Future Assets<br /> Use the formula for compound growth: $A = P(1 + r)^t$. Here, $P = 563,500$, $r = 0.20$, and $t = 10$.<br /> $A = 563,500 \times (1 + 0.20)^{10} = 563,500 \times 6.1917364224 \approx 3,487,000$<br />2. Calculate Future Liabilities<br /> Use the formula for compound growth: $L = P(1 + r)^t$. Here, $P = 288,000$, $r = 0.01$, and $t = 10$.<br /> $L = 288,000 \times (1 + 0.01)^{10} = 288,000 \times 1.104622125 \approx 318,530$<br />3. Calculate Net Worth<br /> Subtract future liabilities from future assets: $Net\ Worth = A - L = 3,487,000 - 318,530 = 3,168,470$
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