-Given That 25 Percent of the Loans Have Been Identified

question 53

Multiple Choice

$$\begin{array} { l l l l } \text { Securities (at par) } & \$ 250 & \text { Deposits } & \$ 975 \\\text { Loans (at par) } & \$ 760 & \text { Capital } & \$ 35\end{array}$$
-Given that 25 percent of the loans have been identified as problem loans, and if historical cost accounting methods allow the bank to write down only 10 percent of the problem loans, what will be the book value of capital?

• A)$35 million.
• B)-$155 million.
• C)$16 million.
• D)-$7 million.
• E)$0.

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