Consider the following Balance Sheet for Forward Thinking Commercial Bank(FTCB) (in millions) Assets Liabilities Floating rate mortgages (currently 14% annually) 250 Demand deposits (currently 5% annually) 300 30 years fixed rate loans 120 1 year CD (currently 8% annually) 50 Equity 20 370 370 a. What is FTCB expected net interest income (NII) at year end? b. What is FTCB expected net interest income at year end if interest rates fell by seven percent (7%). c. What is FTCB expected net interest income at year end if interest rates grew by 300 basis points on assets, but decline by 2% on liabilities.
Consider the following Balance Sheet for Forward Thinking Commercial Bank(FTCB) (in millions) Assets Liabilities Floating rate mortgages (currently 14% annually) 250 Demand deposits (currently 5% annually) 300 30 years fixed rate loans 120 1 year CD (currently 8% annually) 50 Equity 20 370 370 a. What is FTCB expected net interest income (NII) at year end? b. What is FTCB expected net interest income at year end if interest rates fell by seven percent (7%). c. What is FTCB expected net interest income at year end if interest rates grew by 300 basis points on assets, but decline by 2% on liabilities.
Chapter11: Capital Budgeting Decisions
Section: Chapter Questions
Problem 3PB: Use the tables in Appendix B to answer the following questions. A. If you would like to accumulate...
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Question
Consider the following Balance Sheet for Forward Thinking Commercial
Bank(FTCB) (in millions)
|
Assets |
|
Liabilities |
|
|
Floating rate mortgages (currently 14% annually) |
250 |
Demand deposits (currently 5% annually) |
300 |
|
30 years fixed rate loans |
120 |
1 year CD (currently 8% annually) |
50 |
|
|
|
Equity |
20 |
|
|
|
|
|
|
|
370 |
|
370 |
a. What is FTCB expected net interest income (NII) at year end?
b. What is FTCB expected net interest income at year end if interest rates fell by seven percent (7%).
c. What is FTCB expected net interest income at year end if interest rates grew by 300 basis points on assets, but decline by 2% on liabilities.
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