Suppose that the First National Bank has the following balance sheet position and that the required reserve ratio is 15 percent.

Assets

Liabilities

Reserves

$40 million

Deposits

$200 million

Loans

$160 million

Bank Capital

$20 million

Securities

$20 million

First National bank has a net profit after tax of $1,700,000.

Calculate First National Bank's Return on Assets (ROA)

Calculate First National Bank's Equity Multiplier (EM)

Using the info in a and b, calculate First National Bank's Return on Equity (ROE).