Question

How much profit does the bank make at the end of the

year in this scenario?
Scenario: In one year, a bank pays 2% interest on a
$1,000 deposit. The same year, the bank charges 12%
interest on a $1,000 loan.
$100
$120
$140
$2,000

Answer 1

its A.

Explanation:

edge 2020

Answer 2

We have been given that in one year, a bank pays 2% interest on a $1,000 deposit. The same year, the bank charges 12% interest on a $1,000 loan. We are asked to find the profit of bank at the end of one year.

Let us find amount paid by bank on deposit of $1,000 in one year by finding 2% of $1,000.

`\text{Amount paid by bank}=\$1,000* (2)/(100)`

`\text{Amount paid by bank}=\$10* 2`

`\text{Amount paid by bank}=\$20`

Now we will find the amount earned by bank on a loan amount of $1,000 in one year by calculating 12% of $1,000.

`\text{Amount earned by bank}=\$1,000* (12)/(100)`

`\text{Amount earned by bank}=\$10* 12`

`\text{Amount earned by bank}=\$120`

The profit made by bank would be amount earned minus amount paid.

`\text{Profit made by bank}=\$120-\$20`

`\text{Profit made by bank}=\$100`

Therefore, the bank will make a profit of
`\$100` at the end of the year and option A is the correct choice.