As a senior loan officer at MC Bancorp, you have

the following loan applications waiting for review.

The bank uses Altman's $Z$ score, default probabili$-$

ties, mortality rates, and RAROC to assess loan

acceptability. The bank's cost of equity $($the RAROC

benchmark$)$ is $8$ percent. The bank's loan policy

states that the maximum probability of default for

loans by type is as follows: Also assume sales $=$$$1,250m,$ cost of goods sold $=$

$$930m,$ and the market value of equity is equal to

$2\mathrm{.}2$ times the book value. MC Bancorp uses Altman's

$Z$ score model to evaluate AA$-$rated loans.