Question

which person has the greatest net worth?
person 1
house $250,000
mortgage $150,000
savings $50,000
person 2
house $200,000
mortgage $50,000
savings $10,000
○ person 1, because this persons house is worth more.
○ person 1, because this persons assets are greater.
○ person 2, because the difference between this persons assets and liabilities is greater.
○ person 2, because this person has a lower mortgage.

Explanation:

Step1: Calculate Person 1's assets

Assets = House + Savings = $\$250,000 + \$50,000 = \$300,000$

Step2: Calculate Person 1's net worth

Net Worth = Assets - Liabilities = $\$300,000 - \$150,000 = \$150,000$

Step3: Calculate Person 2's assets

Assets = House + Savings = $\$200,000 + \$10,000 = \$210,000$

Step4: Calculate Person 2's net worth

Net Worth = Assets - Liabilities = $\$210,000 - \$50,000 = \$160,000$

Step5: Compare net worth values

$\$160,000 > \$150,000$, so Person 2 has greater net worth, which is the difference between assets and liabilities.

Answer:

Person 2, because the difference between this person's assets and liabilities is greater.