Calculating the Debt–to–Equity Ratio . Robert Thumme owns a $140,000 townhouse and still has an unpaid mortgage of $110,000. In addition to his mortgage, he has the following liabilities: Visa $ 565 MasterCard $ 480 Discover card $ 395 Education loan $ 920 Personal bank loan $ 800 Auto loan $4,250 Total $7,410 Robert’s net worth (not including his home) is about $21,000. This equity is in mutual funds, an automobile, a coin collection, furniture, and other personal property. What is Robert’s debt-to-equity ratio? Has he reached the upper limit of debt obligations? Explain. (Obj. 3)

Personal Finance 1st Edition by Jack R. Kapoor

Edition 1ISBN: 1308231393

Personal Finance 1st Edition by Jack R. Kapoor

Edition 1ISBN: 1308231393

Exercise 16

Calculating the Debt–to–Equity Ratio. Robert Thumme owns a $140,000 townhouse and still has an unpaid mortgage of $110,000. In addition to his mortgage, he has the following liabilities:

Visa	$ 565
MasterCard	$ 480
Discover card	$ 395
Education loan	$ 920
Personal bank loan	$ 800
Auto loan	$4,250
Total	$7,410

Robert’s net worth (not including his home) is about $21,000. This equity is in mutual funds, an automobile, a coin collection, furniture, and other personal property. What is Robert’s debt-to-equity ratio? Has he reached the upper limit of debt obligations? Explain. (Obj. 3)

Explanation

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Debt-to-Equity ratio: Total liabilities ...