Question

Meena owns a house worth $244000 with a mortgage of $108224.she owns a car worth $14000 with a car loan of $3300.She has $3400 in RRSP and $4000 in mutual funds.Her average monthly hydro bills are $114 and her monthly property tax payments are $255. Reema would like a loan of $8000 from the bank so that she can do a bathroom renovation.To determine her debt equity ratio the bank calculates her total assests to be---------? and her total liabilities to be --------?

please fill in the blanks with explanation

Answer 1

Total Assets = House Worth + Car Worth + RRSP Amount + Mutual Fund Amount

= $244,000 + $14,000 + $3,400 + $4,000

= $265,400

Total Liabilities = Mortgage Loan Amount + Car Loan

= $108,224 + $3,300

= $111,524

Total Assets is $265,400

Total Liabilities is $111,524

Monthly hydro bills are not long term liabilities. these will occur every month hence not considered to be in the long liabilities calculation

Monthly property tax payment is not long term liabilities. these will occur every month hence not considered to be in the long liabilities calculation

Loan Amount to be taken is not considered as this is not taken