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Champion Credit Union initiates a credit card product that yields 8.40%, with a funds cost of 3.00% (their profit spread is 5.40%). Legacy Savings Bank

  1. Champion Credit Union initiates a credit card product that yields 8.40%, with a funds cost of 3.00% (their profit spread is 5.40%). Legacy Savings Bank enters that market with an equivalent product yield. How low must they price their funding source to be equally able to retain earnings if the marginal tax rate is 20%, and a competitive dividend payout is 30%?

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