An individual has a home that appraises for $500K, their mortgage is $400K. They open a home equity line of credit (HELOC) and withdraw $60K. On the balance sheet for their home, their equity and changes to __.
Group of answer choices
Increases; $100K
Increases; $400K
Decreases; $60K
Decreases; $40K
Increases; $500K

Question

19-12-2022
Business

Answered

An individual has a home that appraises for $500K, their mortgage is $400K. They open a home equity line of credit (HELOC) and withdraw $60K. On the balance sheet for their home, their equity and changes to __.
Group of answer choices
Increases; $100K
Increases; $400K
Decreases; $60K
Decreases; $40K
Increases; $500K

Answer :

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MonikaNandal MonikaNandal · Answer 1 · 2022-12-24T08:50:28-05:00

They open a home equity line of credit and withdraw $60K. On the balance sheet for their home, their equity decreases; $60K and changes to increases; $100K.

What is equity?

The difference between a firm's obligations and assets on its balance sheet indicates how much equity the company has.

The equity value is calculated using the share price or a value established by valuation specialists or investors.

Owners' equity, stockholders' equity, and shareholders' equity are further names for this account.

The company's balance sheet is used to calculate the equity value.

The book value of a corporation may also be equal to its shareholders' equity.

One of the most popular metrics used by analysts to assess the financial health of a company is equity.

These advantages make stockholders more likely to continue supporting the company.

Learn more about equity, here

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