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Liberty Bank has just made a large infrastructure loan of $300mn. Its balance sheet prior to making the loan is as follows: Assets $ millions
Liberty Bank has just made a large infrastructure loan of $300mn. Its balance sheet prior to making the loan is as follows:
Assets | $ millions | Liabilities | $ millions |
Cash | 100 | Deposits | 610 |
Loan portfolio | 600 | Equity | 90 |
Total assets | 700 | Total liabilities and equity | 700 |
Duration of assets in the table above = 6 years
Duration of liabilities in the table above = 3 years
Assuming the new infrastructure loan has a duration of 7.5years, calculate the new duration of the banks assets after giving out this loan. Give your answer to 1 decimal place. Do not include any units.
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