Question

The following table lists the assets and debts for the Jones family, who just financed a new car. Calculate their net worth. \begin{tabular}{l|l} Assets & Debts \\ \hline Savings \(=\$ 214\) & Student loans \(=\$ 15,988\) \\ \hline Checking \(=\$ 1242\) & Automobile \(1=\$ 4857\) \\ \hline Furniture \(=\$ 21,358\) & Automobile \(2=\$ 23,410\) \\ \hline \end{tabular}

Short answer

Answer: The net worth of the Jones family is $([214 + 1242 + 21,358] - [15,988 + 4,857 + 23,410])$.

Step-by-step solution

Find total assets

To calculate the total assets, we will add the values of all assets which are Savings, Checking, and Furniture. So, Total Assets = Savings + Checking + Furniture\ Total Assets = \(214 + 1242 + 21,358\)

Compute the total debts

Next, we need to calculate the total debts by summing up their values, which are Student loans, Automobile 1, and Automobile 2. So, Total Debts = Student loans + Automobile 1 + Automobile 2\ Total Debts = \(15,988 + 4,857 + 23,410\)

Calculate net worth

Now that we have the total assets and total debts, we can use this information to determine the Jones family's net worth. We simply need to subtract the total debts from the total assets. So, Net Worth = Total Assets - Total Debts\ Net Worth = (\(214 + 1242 + 21,358) - (\)15,988 + 4,857 + 23,410)$

Key concepts

Total Assets

Assets represent the value of everything a person or family owns. These can include money saved in savings and checking accounts, valuable items like furniture, and investments or property. For the Jones family, their total assets consist of practical cash assets as well as tangible assets like furniture.

When calculating total assets in a net worth assessment, it's important to include all sources of value. This means checking for any overlooked items that might contribute to the family's wealth. Assets such as jewelry, art, or other collections should be accounted for if they hold significant value. In the case of the Jones family, they have a savings account, a checking account, and furniture to consider as part of their total assets.

Total Debts

Debts are the total amount of money that is owed to lenders or financial institutions. Types of debt can include loans, credit card balances, mortgages, and other financial obligations. In this context, the Jones family has student loans and payments owed on two automobiles.

To accurately calculate total debts, one must ensure to compile all the money owed, regardless of the type of loan or credit. It’s also critical to distinguish between short-term liabilities, like credit card debt, and long-term liabilities, like mortgages. Considering the full scope of debts is essential for a realistic assessment of financial health.

Prealgebra Problem Solving

Elementary mathematics, often referred to as prealgebra, is a foundational skill that comes into play when solving financial problems like calculating net worth. Understanding basic operations such as addition and subtraction is crucial. The steps to solve the Jones family's net worth clearly exhibit this as addition is used to sum up assets and debts, followed by subtraction to determine net worth.

Problem-solving in prealgebra also involves working with real-world scenarios. It's not just about numbers; it's about understanding contexts, such as financial situations, and applying arithmetic operations to find solutions. For anyone tackling such problems, it's important to develop a methodical approach: list out all relevant figures, perform the necessary calculations step by step, and check results for accuracy.

Net Worth Calculation

Net worth is a measure of financial health and represents the difference between total assets and total debts. To calculate net worth, one must subtract the sum of all debts from the total value of all assets. If the number is positive, it represents a surplus of assets over debts; if negative, it shows a deficit.

The Jones family’s net worth calculation will help determine their financial strength and potential areas for improvement. Keeping track of net worth over time can also be an indicator of financial progress or concerns, prompting actions to increase assets or reduce debt. Regularly updating this calculation when major financial changes occur ensures an accurate and current picture of financial well-being.