19-1

Consider the following income statement for WatchoverU Savings Inc. (in millions):

Assets			Liabilities
Floating-rate mortgages (currently 12% annually)	$	58	NOW accounts (currently 8% annually)	$	78
30-year fixed-rate loans (currently 9% annually)		58	Time deposits (currently 8% annually)		24
			Equity		14
Total	$	116		$	116

a.	What is WatchoverUs expected net interest income at year-end? (Do not round intermediate calculations. Enter your answer in millions rounded to 2 decimal places. (e.g., 32.16))

Net interest income

$ million

b.	What will be the net interest income at year-end if interest rates rise by 1 percent? (Do not round intermediate calculations. Enter your answer in millions rounded to 2 decimal places. (e.g., 32.16))

Net interest income

$ million