24-2

An Fl is planning to issue $320 million in commercial loans. It will finance all of it by issuing demand deposits a. What is the minimum capital required if there are no reserve requirements? (Enter your answer in millions rounded to 1 decimal place. (e.g., 32.1)) Minimum capital million b. What is the minimum demand deposits it needs to attract in order to fund this loan if you assume there is a 10 percent average reserve requirement on demand deposits, all reserves are held in the form of cash, and $16 million of funding is through equity? (Enter your answer in millions rounded to 2 decimal places. (e.g., 32.16)) Minimum demand deposits million c. Prepare a simple balance sheet with total assets and total liabilities and equity, assuming this is the only project funded by the bank. (Enter your answers in millions rounded to 2 decimal places. (e.g 32.16)) Assets Liabilities Cash Demand deposits Loans Equity Total assets Total liabilities& equity