Table 21-6. -Refer to Table 21-6.If the Bank of Springfield Has Lent

question 415

Multiple Choice

Table 21-6.

-Refer to Table 21-6.If the Bank of Springfield has lent out all the money it can given its level of deposits,then what is the reserve requirement?

• A) 5.00 percent
• B) 8.00 percent
• C) 8.42 percent
• D) 95.00 percent

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Definitions:

Internal Rate of Return

The discount rate that makes the net present value (NPV) of all cash flows from a particular project equal to zero.

Cost of Capital

The rate of return a company must pay investors to finance its assets, often used as a benchmark to evaluate the profitability of investments.

Present Values

The today's equivalent value of future money or cash flow series, calculated with a defined rate of return.

Cash Inflows

Money received by a business from its activities, e.g., sales of goods, provision of services, loans received.