Question

The assets and liabilities of a credit union banker are listed. What is the total net worth if the banker pays off the student loans?

A) $219,869
B) $247,517
C) $233,693
D) $252,304

Answer 1

The net worth of the bank is $20.

Step-by-step explanation:

To calculate the net worth of the bank, we need to set up a T-account balance sheet for the bank, with assets and liabilities. The assets include deposits ($400), reserves ($50), and government bonds ($70). The liabilities include loans ($500). The net worth is calculated by subtracting the total liabilities from the total assets.

Assets: Deposits ($400) + Reserves ($50) + Government Bonds ($70) = $520

Liabilities: Loans ($500)

Net Worth = Assets - Liabilities = $520 - $500 = $20