an investor purchased a small property with an equity investment of $100,000 and an $800,000 mortgage. she has held the property for five years, and the mortgage now has a balance of $750,000. the market value of her property is estimated to be $950,000. what is her current equity investment in the property?

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an investor purchased a small property with an equity investment of $100,000 and an $800,000 mortgage. she has held the property for five years, and the mortgage now has a balance of $750,000. the market value of her property is estimated to be $950,000. what is her current equity investment in the property?

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Edwardgk12id Edwardgk12id · Answer 1

Her current equity investment in property that she purchased with an equity investment of $100,000 and $800,000 mortgage which the market value of her property is estimated to be $950,000 is $150,000.

What is equity?

In finance world, equity is ownership of an asset that may have debts or other liabilities attached to them. Equity is measured for accounting purposes by subtracting liabilities from the value of the assets. For example, if you own a house worth $100,000 and owes $80,000 on the mortgage, the difference of $20,000 is considered as an equity.

How to calculate her current equity investment in the property?
The formula of current equity as follows :
Current equity investment = initial equity + reduction in mortgage balance

As we know from the question :
Initial equity = $100,000

reduction in mortgage balance = $800,000 - $750,000 = $50,000

Now, let's use the formula :
Current equity investment = $100,000 + $50,000 = $150,000

Therefore, her current equity investment on the property is $150,000

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