Table 1: Balance Sheet for the First National Bank of Delhi \begin{tabular}{lcclcc} \hline Asset & Value & Net Value & & Equity & Value \\ \hline Cash (C1) & & 25,000 & & Deposits & 375,000 \\ Deposits in Other Banks (C2) & & 5,000 & & Common Stock (T1) & 15,000 \\ Mortgaged Backed Securities (C3) & & 125,000 & & Preferred Stock (T?) & 5,000 \\ Home Mortgages (C4) & 250,000 & & & Retained Earnings (T1) & 5,000 \\ Allowance for Bad Debt & 5,000 & 245,000 & & & \\ \cline { 2 - 3 } \cline { 5 - 6 } Total Assets & & 400,000 & & Total Debt and Equity & 400,000 \\ \hline \end{tabular} 1. Consider the bank balance sheet presented in Table 1 compute the capital adequacy of this bank. How should you rate "Preferred stock" (is it Tier 1 or Tier 2)? 2. Assume that Deposits from other banks earn 1.5%, Mortgaged Backed Securities earn 3.5% and Home Mortgages earn 5.0% (also assume that the bank received $15,000 in principal payments during the year, but made an additional $17,500 in loans). Assume further that the operating expenses where $7,500. Make the accounting entries to recognize this year's transactions assuming that $2,500 is paid in dividends. Create the income statement and balance sheets for the bank at the end of the year. 3. How did the capital adequacy change? Is that better or worse