# Critical thinking

The island Republic of Outlandia has three banks, Barkers, Floyds and National. During a particular day Barkers customers have written cheques worth three million Lira to Floyds customers and cheques worth four million Lira to National customers. Floyds customers have written cheques worth four million Lira to Barkers customers and cheques worth five million Lira to National customers. National customers have written cheques worth three million Lira to Barkers customers and cheques worth two million Lira to Floyds customers.
The banks could settle all the debts to each other that arise because of these cheques by:
A. Floyds Bank paying one million Lira to Barkers Bank and Barkers Bank paying one million Lira to National Bank.
B. Floyds Bank paying three million Lira to National Bank.
C. Floyds Bank paying four million Lira to National Bank.
D. Barkers Bank paying one million Lira to National Bank.
E. Barkers Bank paying four million Lira to National Bank

I am unable to understand the statement “The banks could settle all the debts to each other that arise”. For this to know, do we sum up each bank’s payment and recipient with each of the 3 banks?

I have tried solving it by comparing payments and reciepts but couldn’t come up with strategy to answer the question.

Hi !

To answer your question : “The banks could settle all the debts to each other that arise” means :

• instead of making all the individual payments, the banks could solve their debts in one big payment to each other

The question is, how much would they need to pay each other for that to happen.

You have the right train of thought, you do need to sum their gains and losses to see how much they owe (or how much is owed to them) and then figure how (in the minimal amount of payments) they could settle all these debts.

Here is the answer : (click on the image to see)

B = Barkers
F = Floyds
N = National

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