Answer:
The bank can increase its loans by a maximum of $3750.
Explanation:
required reserves = Deposits×reserve ratio
= $5000×25%
= $1250
Lending capacity or loan = Deposits - required reserves
= $5000 - $1250
= $3750
Therefore, the bank can increase its loans by a maximum of $3750.
The formula is
I=prt
I interest earned 16
P principle 1300
R interest rate 0.04
T time t/365days
16=1300×0.04×(t/365)
Solve for t
T=(16÷(1,300×0.04))×365
T=112.3 days round your answer to get 112 days
Hope it helps!
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