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Given amount of funds available at each interest rate level and the investment opportunity yielding 5.75%, which is the optimal level of interest rate to
Given amount of funds available at each interest rate level and the investment opportunity yielding 5.75%, which is the optimal level of interest rate to be offered?
Tranche | Expected Volume of New Deposits | Rate Offered on New Funds |
1 | 9,999,000 | 3.0000% |
2 | 17,998,200 | 3.5000% |
3 | 23,997,600 | 3.7500% |
4 | 34,996,500 | 4.2500% |
5 | 54,994,500 | 5.0000% |
Offer 3.00% and net a profit of $143,167 | ||
Offer 4.25% and net a profit of $292,470 | ||
Offer 3.75% and net a profit of $299,970 | ||
offer 5% and net a profit of $299,970 |
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