A bank is establishing a loan where: internal transfer price of non-capital funds with the same
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Question:
internal transfer price of non-capital funds with the same maturity as the loan being financed is 6.5%
the loan is to be financed with 15% equity
the target before tax return on equity is 16%
the bank holds liquid assets equal to 10% of non-capital funds
liquids earn, on average, 5%.
What is the percentage net cost of funds?
Related Book For
Income Tax Fundamentals 2013
ISBN: 9781285586618
31st Edition
Authors: Gerald E. Whittenburg, Martha Altus Buller, Steven L Gill
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