As a head of the banks marketing department, you consider a marketing campaign prepared the following estimates:

1. Target population: 50,000

2. Expected response rate: 80 basis points

3. Expected approval rate: 60%

4. Fallout rate: 5%

5. Cost of mailing: $0.49 for mailing and $0.12 for printing

6. Fixed cost per campaign (staff and production): $20,000

What interest rate should the bank charge on these loans, if all other assumptions remain the same?

*Information from prior question included, if neccesary*

You are provided with the following information: Bank's required return on equity is 11% Equity allocation for consumer lending division is 12% Banks' tax rate is 25% EVALUATING PERFORMANCE BY REPORT BASE CATEGORY NEGATIVE PERFORMANCE % # OF = OF NEGATIVE The bank can borrow at the current fed funds SCORE CONSUMER CUMULATIVE CONSUMER CUMULATIVE TO BASE RANGE REPORTS REPORTS rate. (REPORTS) 37.3 0.7 5.5