Question
Adair Credit, Inc. has $36.0 million in consumer loans with an average interest rate of 14.0%. The company has $31.0 million in home equity loans
Adair Credit, Inc. has $36.0 million in consumer loans with an average interest rate of 14.0%. The company has $31.0 million in home equity loans with an average interest rate of 10.0%, and owns $5.0 million in corporate securities with an average interest rate of 8%. Next year, consumer loans are estimated to increase to $41.0 million because of a rate decrease to 12.0%, while home equity loans are estimated to increase to $33.0 million at an average interest rate of 8.5%. Unfortunately, the investment in corporate securities is estimated to decrease by 24% and the average interest rate is estimated to be 11.0%. What is Adair's estimated change in revenues next year?
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