Explanation:
To calculate the bank's net liquidity position, we need to identify cash inflows and outflows:
Cash Inflows:
$100 million$60 million$80 million$30 million$10 millionTotal Inflows = $100 + $60 + $80 + $30 + $10 = $280 million
Cash Outflows:
$70 million$90 million$20 million$50 million$40 millionTotal Outflows = $70 + $90 + $20 + $50 + $40 = $270 million
Net Liquidity Position = Total Inflows - Total Outflows
= $280 million - $270 million = +$10 million
The bank has a positive net liquidity position of +$10 million, meaning it has more cash inflows than outflows over the next 24 hours.
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Over the next 24 hours, Greenlux State Bank estimates that the following cash inflows and outflows (all figures in millions) will occur:
| Cash Flow Item | Amount |
|---|---|
| Deposit withdrawals | $70 |
| Deposit inflows | $100 |
| Scheduled loan repayments | $60 |
| Acceptable loan requests | $90 |
| Borrowing from the money market | $80 |
| Sales of bank assets | $30 |
| Stockholder dividend payments | $20 |
| Revenues from sale of nondeposit services | $10 |
| Repayment of bank borrowing | $50 |
| Operating expenses | $40 |
What is the bank's projected net liquidity position?
A
-30.0 million
B
+10.0 million
C
+40.0 million
D
+90.0 million
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