Tadawel Bank expects to raise AED 40 million in new money if it pays a deposit rate of 7%, AED 120 million in new money if it pays a deposit rate of 7.5%, AED 200 million in new money if it pays a deposit rate of 8%, and AED 240 in new money if it pays a deposit rate of 8.5%. The bank expects to earn 9.5% on all money that it receives in new deposits.

Required. What deposit rate should Tadawel Bank offer on its deposits, if it uses the marginal cost method of determining deposits rates? Show your calculations in a Table as bellow:

Expected Inflows

Rate Offered on New Funds

Total Interest Cost

Marginal Interest Cost

Marginal Cost Rate

Marginal Revenue Rate

Exp. Diff. In Marg. Rev and Cost

Total Profits Earned

Marginal Cost Rate = Change in Total Cost/Additional Fund raised