A bank has a listed prime rate of 7 percent. They have estimated that the marginal cost
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A bank has a listed prime rate of 7 percent. They have estimated that the marginal cost of raising funds is 5 percent, their default risk premium on a loan is 1.5 percent, and that they want a profit margin of 2 percent. They have also estimated that the term risk premium is 0.5 percent. What is the interest rate this bank will charge if they use the cost-plus pricing model?
Related Book For
Contemporary Financial Management
ISBN: 9780324289114
10th Edition
Authors: James R Mcguigan, R Charles Moyer, William J Kretlow
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