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i need help with this question my Work Mode! This shows what is correct or incorrect for the work you have complete First National Bank
i need help with this question
my Work Mode! This shows what is correct or incorrect for the work you have complete First National Bank is doing some scenario analysis. It believes that its source of funds (the Federal Reserve) will soon increase the cost of loans. In fact, the cost of making loans is expected to change from the current 2 percent interest to either 3 percent or 4 percent interest in the next year. There will be no change in its $2,000,000 income at the 2 percent interest level, but net income will fall to $1,000,000 if interest rates increase to 3 percent and decrease to $100,000 if the interest rates increase to 4 percent. Finally, National predicts a 10 percent probability of a decrease to 2 percent interest rate, a 50 percent probability of a 3 percent interest rate, and a 40 percent probability of an increase to 4 percent interest rate. Required: What is the expected financial impact of changing interest rates at First National Bank? (Enter all values os positive value.) Answer is complete but not entirely correct. Amount Changing Expected financial impact 1,060,000 3 decrease Step by Step Solution
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