Suppose a Chartered Bank Has Demand Deposits of $100,000 and the Desired

question 144

Multiple Choice

Suppose a chartered bank has demand deposits of $100,000 and the desired reserve ratio is 10 percent.If the bank's desired and excess reserves are equal, then its actual cash reserves:

• A)are $30,000.
• B)are $10,000.
• C)are $20,000.
• D)cannot be determined from the given information.

Understand and calculate net investment in capital budgeting projects.

Evaluate the financial implications of replacing existing equipment with new equipment, including the calculation of net cash flows.

Analyze the impact of depreciation methods on project cash flows and net investment.

Determine the after-tax cash flows of capital projects.

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Definitions:

Direct Labour Hour

A measure of the amount of time spent by workers directly involved in the manufacturing process of a product.

Static Budget

A budget that is based on a fixed set of assumptions and does not change or adapt to variations in business activity levels.

Planned Activity Level

The anticipated volume of output or activity, often used in budgeting and performance measurement processes.

Machine Hours

A measure of the time that a machine is operated during a specified period, used in calculating manufacturing costs.