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b How much of Retained Earnings goes to Reserves, how much to Cash & Money Market. Explain your reasoning. This is a portion of a
b How much of Retained Earnings goes to Reserves, how much to Cash & Money Market. Explain your reasoning.
This is a portion of a bank stress test similar to the project you completed. Your task is to (a) decide how much of the Net Income to distribute to shareholders as Dividends and how much to direct to retained Earnings; and (b) how much of Retained Earnings to direct to Reserves and how much to Cash & Money Market investments. The point of the question is your reasoning, not the particular amounts. Here is your situation: Net Income $700,000 $42,500,000 Balance Sheet assets (if all. Net Income is included) Risk-Weighted Assets (if all Net Income is included) Net Worth $25,000,000 $2,500,000 Assume required capital is 8% of Risk-Weighted Assets. a How much of Net Income goes to Dividends, how much to Retained Earnings. Explain your reasoning. b How much of Retained Earnings goes to Reserves, how much to Cash & Money Market. Explain your reasoningStep by Step Solution
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