Answer to Question #191829 in Economics for NTOMBI LENYORA

Question

(a)  Mr and Mrs Monama married subject to the accrual system in 2010 and got divorced last week. When they married, Mr Monama had a study debt of R10 000 and no assets, while Mrs Monama had cash savings in the amount of R10 000 and no debts. Mrs Monama’s cash savings were declared in the spouses’ antenuptial contract. Suppose that, according to the weighted average of the consumer price index, money was worth twice as much at the commencement of the marriage as at its dissolution. What amount must be used as the commencement value of Mr Monama’s estate at the time of the divorce? Briefly explain your answer

Answer 1

The initial value of Mr. Monama's estate at the time of the divorce will be the value of the property he acquired in marriage, minus R20,000, as prices have doubled.