Let’s assume that you have been asked to calculate risk-based capital ratios for a bank with the following accounts:

Cash = $15 million

Government securities = $17 million

Mortgage loans = $40 million

Other loans = $60 million

Fixed assets = $20 million

Intangible assets = $14 million

Loan-loss reserves = $15 million

Common equity = $15 million

Trust-preferred securities = $13 million

Cash assets and government securities are not considered risky.

Loans secured by real estate have a 50 percent weighting factor. All other loans have a 100 percent weighting factor in terms of riskiness.

Required

a. Calculate the common equity capital ratio.

b. Calculate the tier 1 ratio using risk-adjusted assets.

c. Calculate the total capital (tier 1 plus tier 2) ratio using risk-adjusted assets.