Question

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.

How much profit does the bank make at the end of the year in this scenario?

$100
$120
$140
$2,000

Answer 1

The bank earns 12% on the $1,000 loan = $120 interest, and pays 2% on the $1,000 deposit = $20 interest.
Profit = $120 − $20 = $100.