How much profit does the bank make at the end of the year in this scenario? Scenario: In one year, a bank pays 2% interest on a<

Question

How much profit does the bank make at the end of the
year in this scenario?
Scenario: In one year, a bank pays 2% interest on a
$1,000 deposit. The same year, the bank charges 12%
interest on a $1,000 loan.
$100
$120
$140
$2,000

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Hadley 2 weeks 2021-09-13T10:47:49+00:00 2 Answers 0

Answers ( )

    0
    2021-09-13T10:48:50+00:00

    We have been given that in one year, a bank pays 2% interest on a  $1,000 deposit. The same year, the bank charges 12%  interest on a $1,000 loan. We are asked to find the profit of bank at the end of one year.

    Let us find amount paid by bank on deposit of $1,000 in one year by finding 2% of $1,000.

    \text{Amount paid by bank}=\$1,000\times \frac{2}{100}

    \text{Amount paid by bank}=\$10\times 2

    \text{Amount paid by bank}=\$20

    Now we will find the amount earned by bank on a loan amount of $1,000 in one year by calculating 12% of $1,000.

    \text{Amount earned by bank}=\$1,000\times \frac{12}{100}

    \text{Amount earned by bank}=\$10\times 12

    \text{Amount earned by bank}=\$120

    The profit made by bank would be amount earned minus amount paid.

    \text{Profit made by bank}=\$120-\$20

    \text{Profit made by bank}=\$100

    Therefore, the bank will make a profit of \$100 at the end of the year and option A is the correct choice.

    0
    2021-09-13T10:49:26+00:00

    Answer:

    its A.

    Step-by-step explanation:

    edge 2020

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