Description of this paper

A bank has $200 million in checking deposits with...

Description

Solution


Question

A bank has $200 million in checking deposits with interest and non-interest costs of 4%, $400 million in savings and time deposits with interest and non-interest costs of 8%, and $200 million in equity capital with a cost of 24%. The bank has estimated that reserve requirements, deposit insurance fees, and uncollected balances reduce the amount of money available on checking deposits by 10% and on savings and time deposits by 5%. What is the bank's before-tax cost of funds?

 

Paper#5527 | Written in 18-Jul-2015

Price : $25
SiteLock