A bank initially has $250 million in assets and $200 million in liabilities.The banks net worth (capital)is _____________ million.If the bank's assets decline by 10% and its liabilities do not change,its capital decreases by ____________ .

Question

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The bank's net worth is $50 million ($250 million - $200 million). If the bank's assets decline by 10%, its assets will be $225 million ($250 million * 0.9). The bank's net worth will then be $25 million ($225 million - $200 million), a decrease of $25 million ($50 million - $25 million). This represents a 50% decrease in the bank's net worth ($25 million / $50 million * 100%).

A Bank Initially Has $250 Million in Assets and $200