Question

A bank received an initial deposit of $12,000, kept a percentage of this money in reserve based on a reserve rate of 6%, and loaned out the rest. The amount it loaned out eventually was all deposited back into the bank. If this cycle continued indefinitely, how much money eventually resulted from the initial deposit?

Answer 1

I'm thinking the information is not enough to give a figure, or too ambiguous

Answer 2

12000*0.06= 720
12000 - 720 = 11280

11280*0.06 = 676.80
11280 - 676.80 = 10603.2

12000
11280
10603.2
etc.

12000
12000*0.94
12000*0.94*0.94
etc

12000(1 + 0.94 + 0.94^2 + ...)

\(12000\cdot\dfrac{1}{1-0.94}\), or, we may wish to subtract the original 12000 from consideration.