1. Metrobank offers one-year loans with a 9 percent stated rate, charges a 1/5 percent loan origination fee, imposes a 12 percent compensating balance requirement, and must pay a 6 percent reserve requirement to the Federal Reserve. What is the return to the bank on these loans?

Rate of return=?

2. Suppose that the financial ratios of a potential borrowing firm took the following values: X₁ = Net working capital/Total assets = 0.40, X₂ = Retained earnings/Total assets = 0.50, X₃ = Earnings before interest and taxes/Total assets = 0.18, X₄ = Market value of equity/Book value of long-term debt = 0.50, X₅ = Sales/Total assets ratio = 0.8. Calculate the Altmans Z-score for this firm.

Altmans Z-score=?