Answer to Question #107987 in Macroeconomics for Sarai

Question

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?

Answer 1

Asset=$90 m

liabilities=$71 m

$\text{new assets}= (110*90)/100$ =$99m

$\text{new liabilities}=(106*71)/100$ =$75.26

$capital=assets−liabilities$

$\text{initial capital}=90-71$ =$19m

$\text{new capital}=99-75.26$ =$23.74m

$\text{change in capital}=23.74-19$ =$4.74m

Percentage change in capital,%c therefore becomes;

%c=(4.74/19)*100=24.95%