BuyFindarrow_forward

Economics (MindTap Course List)

13th Edition
Roger A. Arnold
ISBN: 9781337617383

Solutions

Chapter
Section
BuyFindarrow_forward

Economics (MindTap Course List)

13th Edition
Roger A. Arnold
ISBN: 9781337617383
Textbook Problem

A bank’s assets are $90 million, and its liabilities are $71 million. Its assets increase by 10 percent, and its liabilities increase by 6 percent. What is the percentage change in the bank’s capital, or net worth?

To determine

Identify the percentage change in bank's capital.

Explanation

The bank’s capital can be calculated by using the following formula:

Capital =AssetsLaibilities        (1)

Since, the assets are $90 million and the liabilities are $71 million, the initial bank capital can be calculated by using the Eqution-1 as follows:

Capital =$90million$71million=$19million

Thus, the initial capital of the bank is $19 million.

After the changes, the new assets are $99 million [($90×10%/100)+$90]  and the liabilities are $75

Still sussing out bartleby?

Check out a sample textbook solution.

See a sample solution

The Solution to Your Study Problems

Bartleby provides explanations to thousands of textbook problems written by our experts, many with advanced degrees!

Get Started

Additional Business Solutions

Find more solutions based on key concepts

Show solutions add

Why do economists oppose policies that restrict trade among nations?

Principles of Microeconomics (MindTap Course List)

PREFERRED STOCK RATE OF RETURN What will be the nominal rate of return on a perpetual preferred stock with a 10...

Fundamentals of Financial Management, Concise Edition (with Thomson ONE - Business School Edition, 1 term (6 months) Printed Access Card) (MindTap Course List)

Explain why transferred-in costs are a special type of raw materials for the receiving department.

Managerial Accounting: The Cornerstone of Business Decision-Making

What distinguishes a B2B from a B2C e-business model?

Foundations of Business (MindTap Course List)