Question
Adair Credit, Inc. has $50 million in consumer loans with an average interest rate of 12%. The bank also has $45 million in home equity
Adair Credit, Inc. has $50 million in consumer loans with an average interest rate of 12%. The bank also has $45 million in home equity loans with an average interest rate of 8%. Finally, the bank owns $6 million in corporate securities with an average interest rate of 6%. Next year, consumer loans will increase to $55 million because of a rate decrease to 10%, while home equity loans will increase to $47 million at an average interest rate of 6.5%. Unfortunately, the investment in corporate securities will decrease by 20% and the average interest rate will be only 9%. What is Adair's estimated change in revenues next year?
A)$973,000 decrease.
B)$973,000 increase.
C)$1,303,000 increase.
D)$1,303,000 decrease.
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