Assume That the Desired Reserve Ratio Is 20 Percent

Assume that the desired reserve ratio is 20 percent.First National Bank has vault cash and deposits with the Bank of Canada of $80 million,loans and securities of $320 million,and demand deposits of $400 million.Which of the following statements about First National is the most accurate?

A) It could extend a maximum of $40 million of additional loans.
B) It could extend a maximum of $20 million of additional loans.
C) It could extend a maximum of $10 million of additional loans.
D) It is not in a position to extend additional loans.