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Lowland Bank has the following balance sheet: (Assets) $10 million in reserves and $90 million in loans; (Liabilities) $96 million in deposits; and (Capital) $4
Lowland Bank has the following balance sheet: (Assets) $10 million in reserves and $90 million in loans; (Liabilities) $96 million in deposits; and (Capital) $4 million. If the bank decides to write-off $5 million in loans, is it still solvent? If not, what could it do to deal with this problem?
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