Consider the following two FIs: Company A has $500 million in total assets and total costs equal to $200 million.Company B has $60 million in total assets and total costs equal to $24 million.

What are average costs for each FI?
A)0.40 for A and 2.50 for B
B)2.50 for both A and B.
C)2.50 for A and 0.40 for B.
D)0.40 for both A and B.

Question

Consider the following two FIs: Company A has $500 million in total assets and total costs equal to $200 million.Company B has $60 million in total assets and total costs equal to $24 million.

What are average costs for each FI?
A)0.40 for A and 2.50 for B
B)2.50 for both A and B.
C)2.50 for A and 0.40 for B.
D)0.40 for both A and B.

Quizplus · Accepted Answer

To calculate average costs, we divide total costs by total assets. 
For Company A, average costs = $200 million / $500 million = 0.40
For Company B, average costs = $24 million / $60 million = 0.40
Therefore, the correct answer is D, 0.40 for both A and B.

Consider the Following Two FIs: Company a Has $500 Million