The Bank that Wasn't. The President of the MayFair Bank, Mike Morgan, has received an e-mail from Yurie Bronco, an "IT consultant." The e-mail stated that as a consultant Yurie would like to notify the bank that their network has a vulnerability that could shutdown the bank's entire financial network. For $\$ 125,000$, Yurie is happy to assist the bank in repairing the problem. Yurie has indicated that the "consultant fee" should be wired to a bank account in Switzerland within three days. If the bank agreed, the account number would be provided.

Visibly upset, Mike Morgan visits with Gordon Jenkin. Gordon is the head of IT and network systems for the bank. Gordon emphatically declares, "there are no problems with our systems, that Russian is trying to extort us."

Gordon is partially correct. On the fourth day, the bank's network is completely shut down. Customers cannot use online banking, tellers have to keep deposits at their stations, make paper notations regarding withdrawals, and all business services are stopped. After five days, the network hole is found, and the system is back up and online.

Mr. Morgan has assigned you the task of determining the long-run financial effect on the bank. The bank uses a discount rate of nine percent as criteria for its investments. The annual loss from business clients is expected to range from $\$ 2 \mathrm{M}$ to $\$ 5 \mathrm{M}$ in profit over the next five years. Two thousand individual bank accounts are expected to be closed. The average balance in these accounts is $\$ 10,000$, and the bank earns nine percent on these accounts. Due to the press reporting of the incident, new business profits are expected to decrease. Mr. Morgan estimates that the drop in business profit over each of the next five years will exhibit the following pattern.

Determine the long-term loss to MayFair Bank from the cyber attack.

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Year 1 Decrease in New Business Due to the Cyber Attack $2,000,000 234 $2,000,000 $1,500,000 $1,000,000 5 $ 500,000