Real-Life Math -- Solution
Here's the solution:
Assets:
Current
shares in company: 0.25 x $500,000 = $125,000
Outstanding shares
in company: $100,000
Value of house and other items: $500,000
Total
assets: $125,000 + $100,000 + $500,000 = $725,000
Liabilities:
Mortgage: $400,000
Outstanding
contracts: $75,000
Total liabilities: $400,000 + $75,000
= $475,000
Net worth = Assets - Liabilities
Net worth = $725,000
- $475,000
Net worth = $250,000
Your client's
net worth is $250,000.