Forecast Guidelines : Do a 12 month forecast (Jan 2022 to Dec 2022) using the following budget
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Forecast Guidelines : Do a 12 month forecast (Jan 2022 to Dec 2022) using the following budget guidelines | |
| 1 | Expect no growth in loans for the first three months and then 5% each month from April to June. |
| It will stay at this level (so 0% growth) until September and then we expect 3% growth from October to the end of the year. | |
| 2 | For the deposits, we expect a constant growth of 3.25% each month for the entire year |
| 3 | Operational and admin expenses will increase by $750 every month |
| 4 | The plan is to leave our average loan interest rate at 5% until June and then increase it to 7% for the second half of the year |
| 5 | For deposits, the interest we paid to our customers will go up by 0.10% each month for the first six months, and then stay flat (no change) for the rest of the year |
| ABC BANK | |
| Balance Sheet | |
| 2022 FORECAST | |
| Jan | |
| Assets | |
| Loans | |
| Monthly Growth | 0% |
| Balance | $50,000,000 |
| Interest rate (per year) | 5.00% |
| Liabilities | |
| Monthly Growth | 0% |
| Deposits | $75,000,000 |
| Interest rate (per year) | 1.00% |
| Income Statement | 2022 FORECAST |
| Jan | |
| Loan Interest Income | $208,333 |
| Deposits Interest Expense | $62,500 |
| Operations and Admin Expense | 15,000 |
| Net Income (Profit or Loss) | 130,833 |
Expert Answer:
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