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A bank expects to raise $20 million in new money if it pays a deposit rate of 7%. 560 million in new money if it
A bank expects to raise $20 million in new money if it pays a deposit rate of 7%. 560 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 10% 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? A. 7% B. 7.5% C. 8% D. 8.5% E. None of the options is correct
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