Money planning
Today, the combine ("net") value of these two accounts is $4000, which is the difference between the value of the stock broker account and the combine harvester loan debt (= $14,000-$10,000). Question: according to the terms of his loan, Jung makes no payments on his combine harvester loan for the first year, he also makes no deposit or withdrawals from his stock broker account. At the end of the year, what will be the net value of these two accounts?
Sample Solution
Here's why:
- The net value is the difference between the stock broker account and the combine harvester loan debt.
- There are no changes to either account during the year: no payments on the loan and no deposits or withdrawals from the stock broker account.
- Therefore, the difference between the two accounts, which is the net value, stays the same.
Full Answer Section
- The net value is the difference between the stock broker account and the combine harvester loan debt.
- There are no changes to either account during the year: no payments on the loan and no deposits or withdrawals from the stock broker account.
- Therefore, the difference between the two accounts, which is the net value, stays the same.
So, even though the individual values of the stock broker account and the loan debt remain unchanged, their difference (the net value) also remains constant at $4000.