A bank initially has $190 million in assets and $150 million in liabilities. the banks net worth (capital) is _____________ million. if the bank’s assets increase by 10% and its liabilities do not change, its capital increases by ____________ .
We know that the formula of the balance sheet is Assets=liabilities+capital So we want to find the amount of capital the formula is Capital=assets-liabilities
The first answer is Capital=190million−150million=40million...answer
The second answer if the bank’s assets increase by 10% and its liabilities do not change The amount of assets is 190+190×0.1=209million And the amount of capital is Capital=209−150=59million
