Answer: $ 81,000
Step-by-step explanation:
After ACC Spellman Company deposits its $ 100,000 into Itsa Bank, Itsa will have $ 90,000 as maximum allowable amount to loan to company B Bugle since it has to reserve 10% of the $ 100,000 or $ 10,000.
When That There Bank receives the $ 90,000, it can loan out $ 81,000 as a maximum amount and reserve $ 9000 ( 10% of 90,000) .
Answer:
Step-by-step explanation:
10% of $100,000
10/100*$100,000
0.1*$100,000
$10,000
Reserve ratio refers to a percentage of cash deposit that must be kept by the bank.
So, $10,000 is the amount to be kept by the bank.
To find the total amount loanable to Company B Bugle, Inc.
Total bank deposit- reserve ratio
$100,000-10,000
=$90,000 is the total amount loanable to Company B Bugle, Inc.
If Company B Bugle, Inc. deposit the total loan into the bank ($90,000)
The reserve ratio is 10% of $90,000
10/100*$90,000
0.1*$90,000
$9,000(reserve ratio)
Total loanable amount is
Total deposit-reserve ratio
$90,000-$9000
=$81,000
$81,000 could be loaned out to any other bank customer.
Due to multipliers effects, the bank could loan out a total of $171,000.($90,000 to Company B Bugle, Inc. and $81,000 to another bank customer).
