Question

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?

Answer 1

Stealth Bank's accounting profit or net income was $35 million

Step-by-step 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