The following net transaction accounts and cash reserves at the Fed have been documented by a bank for computation of its reserve requirements (in millions) under lagged reserve accounting.

The average vault cash for the computation period has been estimated to be $1 million per day.
a. What level of average daily reserves is required to be held by the bank during the maintenance period, May 11 - 24?
b. Is the bank in compliance with the requirements?
c. What amount of required reserves can be carried over to the following computation period?
d. If the average cost of funds to the bank is 8 percent per year and deposits at the Fed pay 0.5 percent, what is the effect on the income statement for this bank for this reserve period?

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Friday 14th Monday Tuesday Wednesday Thursday 13th 10th 11th April Net transaction accounts Reserves at Fed 12th S300 $250 21 $260 27 $200 $280 18 20 Monday Tuesday Wednesday Thursday 20th Friday 21th 17th 18th 19th Net transaction accounts Reserves at Fed $280 $270 21 $260 $250 $300 35 20 Monday Tuesday Wednesday Thursday 27th Friday 28th 24th 25th 26th Net transaction accounts Reserves at Fed $230 19 $250 21 S240 $260 19 S270 19 Mondav Tuesday Wednesdav Thursdav 4th Fridav May Net transaction accounts lst 2nd 5th $200 $250 21 $300 $280 $260 Reserves at Fed 20 Mondav Sth $280 Tuesdav Wednesdav Thursdav 11th $260 27 Fridav 12th $250 9th 10th Net transaction accounts Reserves at Fed $300 35 S270 21 20 27 Monday 15th Tuesday Wednesday 17th Thursday 18th Friday 19th 16th Net transaction accounts Reserves at Fed $240 20 $230 35 $250 21 $260 18 $270 28 Monday 22th Tuesday Wednesday Thursday 25th Friday 26th 23th 24th Net transaction accounts Reserves at Fed $200 19 S300 19 $250 21 S280 19 $260