Suppose that Big Bucks Bank has the simplified balance sheet shown below. The reserve ratlo Is 20 percent.Assets(1)(2)Liabilities and net worth(1)(2')Reserves26,000Checkable deposits$ 100,000Securities38,000Loans36,000Instructions: Enter your answers as a whole number.a. What is the maximum amount of new loans that Big Bucks Bank can make?Using the table above, show In columns 1 and 1' how the bank's balance sheet wll appear after the bank has lent this additionalamount by Inserting the new values Into the gray shaded cells of the glven table.b. By how much has the money supply changed?C. How will the bank's balance sheet appear after checks drawn for the entire amount of the new loans have been cleared agalnst thebank? Show the new balance sheet in columns 2 and 2' by Inserting the new values Into the gray shaded cells of the given table.d. Using the original figures, revisit questions a, b, and cbased on the assumption that the reserve ratio is now 15 percent.Assets(3)(4)Liabilities and net worth(3')(4)Reserves26,000Checkable deposits$ 100,000Securities38,000Loans36,000What is the maximum amount of new loans that this bank can make?Show In columns 3 and 3' how the bank's balance sheet will appear after the bank has lent this additional amount. Add the new valuesInto the gray shaded cells of the glven table.By how much has the money supply changed?$How will the bank's balance sheet appear after checks drawn for the entire amount of the new loans have been cleared agalnst thebank? Show the new balance sheet In columns 4 and 4' in the table above. Add the new values into the gray shaded cells of the glventable.

Balance sheets are statements that are prepared by companies in order to know their financial…

Answered: (1) $ 20,000 38,000 36,000 %24

Business

Accounting

(1) $ 20,000 38,000 36,000 %24

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

See similar textbooks

Similar questions

Raghubhai
3. Refer to the following table of cash flows: End of Year 8 12 16 ΕΟ Cash Flow P5,000 P5,000 P5,000 P5,000 P5,000 What is the annual worth of these cash flows over 16 years when i = 5% per year?
Look at the cash flows for projects F and G given below. Cash Flows($) Project C0 C1 C2 C3 C4 C5 C6 C7 C8 IRR (%) NPV at 10% F (8,000 ) 5,200 5,200 5,200 0 0 0 0 0 42.6 4,932 G (8,000 ) 2,600 2,600 2,600 2,600 2,600 2,600 2,600 2,600 28.0 5,871 The cost of capital was assumed to be 10%. Assume that the forecasted cash flows for projects of this type are overstated by 8% on average. That is, the forecast for each cash flow from each project should be reduced by 8%. But a lazy financial manager, unwilling to take the time to argue with the projects’ sponsors, instructs them to use a discount rate of 18%.
Relevant Cash Flow Data for Year 2:Sales revenues Year 2 $100,000Cost of Goods Sold 20,000Depreciation Expense 10,000Tax Rate 40% Based on the above cash flow data: What is the operating cash flow for year two of this capital budgeting project? A.130,000 B.52,000 C.42,000 D. 78,000
What is correct option
Abhaliya
21 What is the equivalent annual cost for a project that requires a $40,000 investment at time-period zero, and a $10,000 annual expense during each of the next 4 years, if the opportunity cost of capital is 10%? g OD A $20,000.00 B. $21,356.95 С. $22,618.83 D. $25,237.66 O A OB ос
Internal rate of return and modified internal rate of return. Quark Industries has three potential projects, all with an initial cost of $2,100,000. Given the discount rate and the future cash flow of each project in the following table, E, what are the IRRS and MIRRS of the three projects for Quark Industries?
Incremental Analysis n A1 A2 -$1,000 -$5,000 1 $2,000 $7,000 IRR 100% 40% PW(10%) $818 $1,364 R-122 [Review Question] Use the cash flow diagrams seen earlier (Ai and A2), what if the MARR=35%? R-123 (Review Question] Two investment locations given different rewards for a company. How to set MARR so that Mexica location will be selected? [A] 0% < MARR <= 30% [B] 30% < MARR<= 100% [C] 0% < MARR <= 100% [D] No MARR can make Mexico to be selected. $1OM $13M Location: Canada Location Mexico Year 1 Year 1 SSM $1OM
6
Clarita Contracting builds roads, tunnels, bridges, and other transportation infrastructure. The following are the budgeted costs and time (months) to a given stage of completion for a project to upgrade a bridge to current standards. The project was originally estimated to take 25 months to complete. Also presented are the actual results through the first 11 months of the project. Percentage Complete 0% 4% 8% 12% 16% 20% 24% 28% 32% 36% 40% 44% 48% 52% 56% 60% 64% 68% 72% 76% 80% 84% 88% 92% 96% 100% Cost ($000) Budget 0 213 471 775 1,125 1,520 1,961 2,447 2,979 3,557 4,180 4,849 5,563 6,323 7,129 7,980 8,877 9,819 10,807 11,841 12,920 14,045 15,215 16,431 17,693 19,000 Actual 0 112 266 464 706 990 1,317 1,688 2,102 2,559 3,059 3,063 4,189 4,819 Months to Reach Budget Actual 0 5 7 8 9 10 11 12 13 14 14 15 16 17 18 18 19 20 20 21 22 22 23 24 24 25 0 1 1 2 3 4 4 5 6 7 8 9 10 11
Year 0 2 Project A -$50,000 $24,200 $16,800 $46,500 Project B -$45,000 $39,000 $18,000 $18,000 Assume these projects are mutually exclusive and the cost of capital is 12.6%. Which of the following statements are true? A. The payback period of project A is 2.19 years. B. You'll accept project A since its NPV is about $872.85 greater than that of project B. C. You'll accept project B since its payback period is shorter than project A. D. Both (A) and (B) are true. E. Both (A) and (C) are true.