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8 June, 19:15

Last year Stealth Bank received $60 million in interest payments from borrowers. $20 million in loans were written off as uncollectible. It paid out $22 million in interest to its depositors and collected $35 million for various fees it charged. Administration costs were $15 million and taxes were $3 million. What was the value of Stealth Bank's accounting profits?

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  1. 8 June, 20:58
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    Stealth Bank's accounting profit or net income was $35 million

    Explanation:

    Accounting profit or net income is equal to total reveneu minus total expenses.

    Income Statement

    Revenue

    Interest Earned = $60,000,000 Fees Collected = $35,000,000 Total Revenue = $95,000,000

    Expenses

    Loans written-off = $20,000,000 Interest Paid = $22,000,000 Adminstration Costs = $15,000,000 Taxes = $3,000,000 Total Expenses = $60,000,000

    Accounting Profit or Net Income

    (Revenue - total expenses) = $95,000,000 - $60,000,000

    = $35,000,000
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