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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.


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