Standard Side Bank,a U

Multiple Choice

Standard Side Bank,a U.S.national bank,has $50 million in unimpaired capital and surpluses and $86 million in total time and savings deposits.Average revenue for the bank in the last three years is $12.5 million and a net interest income of $3.2 million.Pluto Inc.has applied for a loan of $9 million to the bank against which it is willing to provide $1 million worth of ten-year treasury securities.What is the maximum amount of loan the bank can make to Pluto?

A) $9 million
B) $4.5 million
C) $7.5 million
D) $8.5 million
E) $1 million