58. A home was bought 4 years ago. The purchase price was $92,000 and the buyer made a down payment of $11,000. The current loan balance is $79,000. The house was recently appraised for $116,000. What is the equity?
Answer: D
The equity in the home is $37,000.
Equity is calculated by subtracting the current loan balance from the appraised value of the home. In this case, the equity is $116,000 (appraised value) minus $79,000 (loan balance), resulting in an equity of $37,000.
A) 13,000
This option is incorrect because it underestimates the equity by not accurately considering the difference between the appraised value and the loan balance. The correct calculation leads to a higher value than $13,000.
B) 24,000
This option is also incorrect as it still does not reflect the proper calculation of equity. The difference between the appraised value of $116,000 and the loan balance of $79,000 results in a much larger equity figure than $24,000.
C) 35,000
While this option is closer to the correct answer, it still does not represent the accurate calculation of equity. The difference between the appraised value and the loan balance is $37,000, making this option incorrect.
D) 37,000
This option is correct as it accurately reflects the calculation of equity. By subtracting the current loan balance of $79,000 from the appraised value of $116,000, we arrive at an equity of $37,000.
Conclusion
The correct calculation of equity clearly shows that $37,000 is the accurate figure, derived from the difference between the appraised value and the loan balance. All other options fail to represent this calculation accurately, either underestimating or miscalculating the equity. Thus, D is the definitive answer.