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First National Bank of North America (FNBNA) Assets Liabilities & Equity Amount (million $) Annual Rate of Return Amount (million $) Annual Cost Rate Cash
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| First National Bank of North America (FNBNA) |
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| Assets | Liabilities & Equity | |||||
| Amount (million $) | Annual Rate of Return | Amount (million $) | Annual Cost Rate | |||
| Cash | $10 | 0.00% | Core deposits | $80 | 4.00% | |
| Treasury Securities | 30 | 5.50% | Borrowings | 10 | 7.00% | |
| Loans | 60 | 9.00% | Equity | 10 | ||
| Total | $100 | Total | $100 | |||
If FNBNA is expecting a $20 million net deposit drain and the bank wishes to fund the drain by borrowing more money, how much will pretax net income change if the borrowing cost is the same as on its existing borrowed funds?
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