Please answer questions in the attached document below

BU4774 Dr. Katarzyna Platt Homework 6 Please show all calculations. Suppose that the First National Bank has the following balance sheet position and that the required reserve ratio is 20 percent. Assets Liabilities Reserves $25 million Deposits $100 million Loans $75 million Bank Capital $10 million Securities $10 million 1. If the bank suffers the deposit outflow of $6 million, what will its balance now look like? Show this by filling in the amounts in the following balance sheet: Assets Liabilities Reserves Deposits Loans Bank Capital Securities 2. Suppose now the bank is hit with another $4 million deposit outflow. What will its balance sheet position look like now? Assets Liabilities Reserves Deposits Loans Bank Capital Securities a) Must the bank make an adjustment in its balance sheet? b) Why or why not? 3. After selling off the securities to meet its reserve requirements, what will its balance sheet look like? Assets Reserves Loans Securities Liabilities Deposits Bank Capital 4. If, after selling off securities, the bank is not hit by another $10 in withdrawals of deposits and it sells off all its securities to obtain reserves, what will the balance sheet look like? Page 1 of 2 BU4774 Dr. Katarzyna Platt Assets Reserves Loans Securities Liabilities Deposits Bank Capital 5. If the bank is now unable to call in or sell any of its loans and no one is willing to lend money to this bank, what will happen to the bank and why? 6. Using the beginning balance sheet for First National Bank and assuming that First National bank has a net profit after tax of $1,650,000 a. Calculate First National Bank's Return on Assets (ROA) b. Calculate First National Bank's Equity Multiplier (EM) c. Using the info in a and b, calculate First National Bank's Return on Equity (ROE). Page 2 of 2