CONBANK bank has the following market value balance sheet structure:

The loan has a fixed rate of 5% with a 15-year maturity and equal yearly payments (amortised). The certificate of deposit has a one-year maturity and a 3 percent fixed interest rate. SBSC bank expects no additional asset growth. Calculate the market value of equity at the end of year one, assuming that market interest rates increased by 75 basis points. State any other simplifying assumptions.

\begin{tabular}{|l|r|l|r|} \hline \multicolumn{2}{|l|}{ Assets (billions) } & \multicolumn{2}{l|}{ Liabilities and Equity (billions) } \\ \hline Cash & $200,000 & Certificate of Deposit & $2,000,000 \\ \hline Loan fixed rate & $1,250,000 & Equity & $200,000 \\ \hline Loan variable rate & $750,000 & & \\ \hline Total & $2,200,000 & & $2,200,000 \\ \hline \end{tabular}