Unit 17

Question 1

Equity

Answer 1

Equity is the propertie’s value minus mortgage debt. A property worth $500,000 has an outstanding debt of $375,000.
The investors’ equity is $125,000.
* $500,000 value - $375,000 mortgage debt = $125,000 equity

Question 2

Valuation of Businesses
Liquidation analysis.

Answer 2

The liquidation of a business may become necessary because of the failure of a business, the death of a sole proprietor, the dissolution of a partnership, a court order, or any number of other reasons.
In a liquidation analysis, business brokers and financial experts must consider such factors as the ability of the firm to pay off short-term obligations, the value of the inventory on hand, and the liquidation value of preferred stock.