Enter the initial equity, additional investment, and the increase in property value into the calculator to determine the new equity. This calculator helps in understanding the increase in ownership value after additional investments and property value appreciation.
Equity Increase Formula
The following formula is used to calculate the new equity.
NE = IE + AI + PVI
Variables:
- NE is the new equity ($)
- IE is the initial equity ($)
- AI is the additional investment ($)
- PVI is the property value increase ($)
To calculate the new equity, add the initial equity to the additional investment and the increase in property value.
What is Equity Increase?
Equity increase refers to the growth in the owner’s interest in an asset, typically real estate, due to contributions towards the principal of a loan or through the appreciation of the asset’s value. It is a key indicator of financial health for property investments and can impact the ability to borrow against the property or profit from its sale.
How to Calculate Equity Increase?
The following steps outline how to calculate the Equity Increase.
- First, determine the initial equity (IE) in dollars.
- Next, determine the additional investment (AI) in dollars.
- Next, determine the property value increase (PVI) in dollars.
- Next, gather the formula from above = NE = IE + AI + PVI.
- Finally, calculate the new equity (NE) in dollars.
- After inserting the variables and calculating the result, check your answer with the calculator above.
Example Problem :
Use the following variables as an example problem to test your knowledge.
Initial equity (IE) = $50,000
Additional investment (AI) = $15,000
Property value increase (PVI) = $10,000
