Yes, the investors should be excited to get such a return! However, what if there is an increase in defaults, so that the bank's assets (loans) fall in value by, say, 10%, or $7,200,000×0.1=$720,000 ? The value of loans outstanding would decline to $7,200,000−$720,000=$6,480,000 , and total assets would be $1,000,000+$6,480,000=$7,480,000 . Consequently, the stockholders' equity will decline to $7,480,000−$8,000,000=−$520,000 .

Lavage rapide is a canadian company that owns and operates a large automatic car wash facility near montreal. the following table provides data concerning the company’s costs: fixed cost per month cost per car washed cleaning supplies $ 0.70 electricity $ 1,400 $ 0.07 maintenance $ 0.15 wages and salaries $ 4,900 $ 0.30 depreciation $ 8,300 rent $ 1,900 administrative expenses $ 1,400 $ 0.03 for example, electricity costs are $1,400 per month plus $0.07 per car washed. the company expects to wash 8,000 cars in august and to collect an average of $6.50 per car washed. the actual operating results for august appear below. lavage rapide income statement for the month ended august 31 actual cars washed 8,100 revenue $ 54,100 expenses: cleaning supplies 6,100 electricity 1,930 maintenance 1,440 wages and salaries 7,660 depreciation 8,300 rent 2,100 administrative expenses 1,540 total expense 29,070 net operating income $ 25,030 required: calculate the company's revenue and spending variances for august.