Need done ASAP its for financial literacy. Karina is 24 years old. She graduated from college two years ago and lives on her own
. She is an engineer at a national manufacturing company. Karina is paid $48,000/yr and has great benefits through work. She is still on her parent’s health insurance but has a retirement plan as well as term life and long term disability insurance through her employer. For her 401(k) retirement plan, Karina contributes 10% of her salary and the company matches 4%.
Karina is doing her best to pay down her student loans quickly now that her savings account is built up. She made saving a priority as she wanted to have a healthy emergency fund and knows she needs to save for another vehicle someday. She has saved $9,000 in her savings account and keeps a balance of $3,000 in her checking account. She still drives a family car that her parent’s own (2011 Honda Civic - $5,000 fair market value). After her last month’s payment, Karina owes $14,500 on her student loans at an interest rate of 5.8%. Her student loan monthly payments are $250/mo but she has been paying a total of $400 each month to pay them down quicker.
Karina has a credit card with a $5,000 limit but only puts monthly expenses on the card and pays off the balance in full each month. Her parents lent her some money in college and she still owes them $2,000 and pays $100 every month (they don’t charge her any interest). Over the last two years her 401(k) balance has grown to $14,800 and she has also been contributing $200 mo into her Roth IRA which has a balance of $5,200.
Karina’s other monthly expenses include her rent ($500/mo shared apartment with a friend), $100/mo utilities, $80/mo cell phone plan, $50/mo gym membership, $200/mo for clothing, $250/mo groceries/restaurants, $300/mo car expenses (insurance, gas, maintenance, repairs, registration fee), $200/mo towards fun/entertainment, and about $175/mo in other miscellaneous expenses.
Karina estimates that she spent $2,000 on her clothing and that the fair market value of her clothing is $400. Her furniture costs $1,600 and is now worth $300. She purchased her phone last year for $1,000 and the fair market value is now $450.
1. List Karina’s assets.
to pay her student loans off quickly
2. List Karina’s liabilities.
pay her rent, cellphone gym membership her clothing groceries and going out to eat car exspensecs insurance gas maintenance registration fee
Using information from the story, complete Karina’s net worth statement.
For the Month of May
Name
Amount
Liquid Assets
Illiquid Assets
Total Assets
Liabilities
Total Liabilities
Net Worth
3. What does “fair market value” mean?
4. Is Karina solvent? Explain your answer.
