You are given the responsibility to review your bank’s liquidity position by top management, as…

You are given the responsibility to review your bank’s liquidity position by top management, as reflected by the balance sheet and income statement information. To do this your assistant assembled the following financial data per your request:
The following is the balance sheet of a DI in millions:

Assets		Liabilities and equity
Cash	$12	Demand deposits	$100
Loans	80
Plant and equipment	30	Equity	22
Total	$122	Total	$122

The asset-liability management committee has estimated that the loans, whose average interest rate is 5 percent and whose average life is five years, will have to be discounted at 8 percent if they are to be sold in less than two days. If they can be sold later than a week, the DI will receive the full market value. Loans are not amortized; that is, the principal is paid at maturity.

In a crisis, if depositors all demand payment on the second day, what amount will they receive? Assume no deposit insurance.

	A.	$ 60.04 millions
	B.	$ 72.04 millions
	C.	$ 85.04 millions
	D.	$ 82.42 millions