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The Jaguar Bank of Indianapolis (JBI) starts operations on January 1, 2022 issuing equity amounting $100. JBI advertises an annual interest of 4% for its
The Jaguar Bank of Indianapolis (JBI) starts operations on January 1, 2022 issuing equity amounting $100. JBI advertises an annual interest of 4% for its savings deposits, paid annually, and free checking accounts (i.e., no maintenance fee). On the first day of operations, JBI receives a total of $150 as checking deposits and $750 as savings deposits. The bank lends $700 for an annual interest rate of 8%. It purchases treasury bonds worth $150 which earns 5% per annum. JBI maintains $100 at the Fed and keeps the remaining liquidity in cash reserves. Federal Reserve pays 4.5% interest on JBI's reserve account. However, JBI does not pay interest on checking accounts of its customers. JBI's operational expenses during its first year of operations is $18 and the corporate tax rate is 25%. Shareholders of JBI receive 10% dividends. Prepare JBI's balance sheet as at January 1, 2022 at the closure of business and find the following. . Primary Reserves = $ Total Assets= $ Secondary Reserves = $ Total Liabilities= $ Net Worth $ Equity Ratio= %.
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