When a customer deposits $10,000 into a bank, and the bank retains 20% to cover withdrawals, we first need to calculate how much the bank retains and then how much it can lend out.
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Calculate the amount retained by the bank: \[ \text{Amount retained} = 20% \times 10,000 = 0.20 \times 10,000 = 2,000 \]
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Calculate the amount available for lending: \[ \text{Amount available for lending} = \text{Total deposit} - \text{Amount retained} \] \[ = 10,000 - 2,000 = 8,000 \]
Therefore, the bank would be capable of lending about $8,000 to an eligible loan applicant.
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