Consider the simple bank balance sheet shown below (amount in millions of $). Suppose, subsequently, total nonperforming loans = $35 million. If the regulatory minimum equity ratio is 5 percent, would this bank be in violation after the charge-off? Hint: Watch video for analysis.

ASSETS		LIABILITY & EQUITY
Cash	$70	Deposits	$300
Loans	280	Equity (net worth)	50
Total assets	$350	Total debt & equity	$350

Question 4 options:

1)	Yes, equity ratio after the charge-off is 14.30%

2)	No, equity ratio after the charge-off is 14.30%

3)	Yes, equity ratio after the charge-off is 4.8%

4)	No, equity ratio after the charge-off is 10%

5)	No, equity ratio after the charge-off is 11.11%