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A bank expects to raise $30 million in new money if it pays a deposit rate of 7%. It can raise $60 million in new
A bank expects to raise $30 million in new money if it pays a deposit rate of 7%. It can raise $60 million in new money if it pays a deposit rate of 7.5%. It can raise $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%. This bank expects to earn 9% on all money that is receives in new deposits. What is the marginal cost of deposits if this bank raises their deposit rate form 8% to 8.5%? Can someone please help me answer this question with all work shown long hand?
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