Question: Pls answer all three questions for THUMBS UP. Pls clearly show steps a) A bank has $500 million in checking deposits with interest and non-interest

Pls answer all three questions for THUMBS UP. Pls clearly show steps

a) A bank has $500 million in checking deposits with interest and non-interest costs of 6%, $250 million in savings and time deposits with interest and non-interest costs of 14%, and $250 million in equity capital with a cost of 25%. The bank has estimated that reserve requirements, deposit insurance fees and uncollected balances reduce the amount of money available on checking deposits by 15% and on savings and time deposits by 4%. What is the bank's before-tax cost of funds?

b) A bank expects to raise $30 million in new money if it pays a deposit rate of 7%, $60 million in new money if it pays a deposit rate of 7.5%, $80 million in new money if it pays a deposit rate of 8%, and $100 million in new money if it pays a deposit rate of 8.5%. The bank expects to earn 9% on all money that it receives in new deposits. What deposit rate should the bank offer on its deposits, if it uses the marginal cost method of determining deposit rates?

c) A bank has $100 million in checking deposits with interest and non-interest costs of 8%, $600 million in savings and time deposits with interest and non-interest costs of 12%, and $100 million in equity capital with a cost of 26%. The bank has estimated that reserve requirements, deposit insurance fees and uncollected balances reduce the amount of money available on checking deposits by 20% and on savings and time deposits by 5%. What is the bank's before-tax cost of funds?

Step by Step Solution

There are 3 Steps involved in it

1 Expert Approved Answer

Step: 1 Unlock blur-text-image

Question Has Been Solved by an Expert!

Get step-by-step solutions from verified subject matter experts

Step: 2 Unlock

Step: 3 Unlock

Students Have Also Explored These Related Finance Questions!

HydroHappy management wants to examine its largest nonvalue-added cost, selling costs, to see if it can identify a better cost driver in an effort to lower its total selling costs. The company...

Pls answer all three questions for THUMBS UP. Pls clearly show steps a) From an analysis on its deposits, a bank determines that account processing and other operating expenses cost the bank $4.15...

please I need solution to all the three questions. thanks answer all the three questions 3. If a bank manager was quite certain that interest rates were going to fall within the next six months, how...

Part one. 1. (4 pts.) Briefly define each of the components of Y = C + I + G + NX and give an example for each category of expenditure: (3 pts.) Do economists prefer Nominal GDP or Real GDP as the...

Instructions - Answer all the questions all calculations must be clearly indicated No essays - write factual and structured Maximum 10 pages You are not allowed to do any updates on the Case...

Read the attached opinion from the Lindholm v Brant case down below which gives more detailed information about the case and shows how complicated title can be. You are the Judge. Answer these three...

Topic: Company Analysis - Due by Sunday Assignment: Choose a publically-traded for profit company you would like to learn more about. Find a copy of their most recent annual report using the...

It is becoming widely expected that interest rates will rise in the coming year. In recent weeks the 10 year US bond has risen from about 1.50% to 1.80%. Using the appendix for chapter 2 on Webster...

can you answer for "other borrowings" section How Much Wili . 1e Fed Raise Rates in 2023? Here's What Experts Are Saying. Date published: Feb 7th,2023 Author: Sarah Foster Most of the Federal...

MH0007 0 0 7 7645065 Ca s ey B u rt Fra nk T. R o tha e rm e l Bank of America (in 2010) and the New Financial Landscape Stephanie Milner spent the fall and winter of 2008-2009 like many Americans,...

Explain why the return on shareholders' equity provides information on the rate of return to common shareholders only.

For each of the following, independent scenarios, select whether thenature of the costs is variable, fixed, mixed, or step costs. If the nature of the cost changes over time, select the initial type...

An American Depositary Receipt is defined as a security. Multiple Choice that has been deposited in an interest - bearing account at a US , bank. issued outside the U . S . that represents shares of...

2023 1040 form 1.Phillip and Claire are married and file a joint return. Phillip is self-employed as a real estate agent, and Claire is a flight attendant. Phillip and Claire have three dependent...