Company X receives revenue (net interest income) from the two loan products it offers. The loans...

 

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Company X receives revenue (net interest income) from the two loan products it offers. The loans require resources from Application and Payments Processing. The manager wants to have an idea on the margin per loan product. Loan product E (easy) contributes 60% of the revenue while loan product D (difficult) contributes 40% of the revenue. What is the net income/margin per product? Company Income Statement Loan Net interest Income $1,000 300 Loan Application Expense Payments Processing Expense 400 Net income S 300 Margin 30% FIGURE 1.3 Consolidated Product Income Statement In reality, the two loan products are very different. Loan product E requires a web- based application and electronic payments. Loan product D is a traditional paperbased application with paper check payments. If product D's applications took five times the effort of Product E and the payments took twice the effort of Product, the net margin would look like? Company X receives revenue (net interest income) from the two loan products it offers. The loans require resources from Application and Payments Processing. The manager wants to have an idea on the margin per loan product. Loan product E (easy) contributes 60% of the revenue while loan product D (difficult) contributes 40% of the revenue. What is the net income/margin per product? Company Income Statement Loan Net interest Income $1,000 300 Loan Application Expense Payments Processing Expense 400 Net income S 300 Margin 30% FIGURE 1.3 Consolidated Product Income Statement In reality, the two loan products are very different. Loan product E requires a web- based application and electronic payments. Loan product D is a traditional paperbased application with paper check payments. If product D's applications took five times the effort of Product E and the payments took twice the effort of Product, the net margin would look like?

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Computation of the net margin of Product E Lo... View the full answer