2. The balance sheet of Alliance Bank appears as follows: Assets Liabilities and Maturities Short-term securities and Short-term and floating adjustable rate loans $220 rate funds Duration: 6 months Duration: 6 months $560 Fixed rate loans Fixed rate funds Duration: 8 years Nonearning Assets 700- Duration: 30 months 270 80 Equity 170 Total assets $1,000 Total Liabilities and Net Worth $1000 a. Calculate the duration of this balance sheet. [5 Marks] b. Assuming that the required rate of return is 8%, what would be the effect on the bank's economic value if interest rates increased by 1%. [3 Marks] c. Suppose that the expected change in EVE is unacceptable to management. What outcome could management take to reduce this change? [2 Marks] (10 Marks)

2. The balance sheet of Alliance Bank appears as follows: Assets Liabilities and Maturities Short-term securities and Short-term and floating adjustable rate loans $220 rate funds Duration: 6 months Duration: 6 months $560 Fixed rate loans Fixed rate funds Duration: 8 years Nonearning Assets 700- Duration: 30 months 270 80 Equity 170 Total assets $1,000 Total Liabilities and Net Worth $1000 a. Calculate the duration of this balance sheet. [5 Marks] b. Assuming that the required rate of return is 8%, what would be the effect on the bank's economic value if interest rates increased by 1%. [3 Marks] c. Suppose that the expected change in EVE is unacceptable to management. What outcome could management take to reduce this change? [2 Marks] (10 Marks)

Intermediate Accounting: Reporting And Analysis

3rd Edition

ISBN:9781337788281

Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Publisher:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Chapter4: The Balance Sheet And The Statement Of Shareholders' Equity

Section: Chapter Questions

Problem 16P: Ratios Analyses: McCormick Refer to the information for McCormick above. Additional information for...

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Given the following information, calculate the duration of assets and liabilities. Assets Amount Rate Duration Cash 90 Loans 800 12% 2 years Treasuries 110 9% 8 years Liabilities and Equity Time deposits 500 6% 1.75 years CDs 425 8% 2.50 years Equity 75
5. The following list of balances obtained from Agro Trading as at 31 July 2020. PARTICULARS RMCash in hand 100Cash at bank 9,000Account receivable 12,840Inventory as at 1 June 2019 26,500Motor vehicles 14,000Plant and machinery 50,000Long term investment 10,000Freehold premises 147,500Account payable 16,50010% Mortgage on freehold premises 34,000Capital 219,840Purchases 128,900Wages and salaries 70,300Rates and taxes 1,000Interest on mortgage 1,700General expenses 2,000Carriage outwards 21,000Insurance premium 3,000Drawings 7,400Carriage inwards 600Advertising expenses 14,000Sales 250,000Sales returns 1,000Purchases returns 500Discount received 600Discount allowed 800Allowance for doubtful debt 200Inventory at 31 July 2020 was RM30,000.Required: i. Statement of Profit and Loss and Others Comprehensive Income for the year ended 31 July 2020.ii. Statement of Financial Position as 31 July 2020
The following balance sheet is to be used to answer the questions below Yields for assets & liabilities shown in % in parentheses Assets $M Liabilities & Equity $M Cash & Cash Equivalents 85 Overnight Repurchase Agreements 650 1 - month Treasury Bills (3%) 125 5 - year Fixed-rate Debt (4.5%) 450 3 - month Commercial Paper (3.75 %) 175 2 - year Consumer Loans (4.25 %) 235 Equity 160 5-year Adjustable -Rate Mortgages (3.5% resetting semiannually) 540 5 - year Fixed rate Municipal Bonds (4%) 100 Total Assets 1260 Total Liabilities & Equity 1260 a. Calculate the firm's repricing gap over the following intervals: $M 30 Days 90 Days 2 Years b. Compute the impact over the next 90 days on net interest income under the following changes in interest rates $M +75bps -100bps c. Runoffs on consumer and mortgage loans over the next year above are $30M and $50M, respectively What would be the 1 - year repricing gap? $M d. Taking into account the effect of runoffs, what is the effect on net interest…
The following information is for AmBank. The ECR reflects the relationship of each account's rate to the prime rate. Rate Sensitive Assets 1-year Balance Sheet GAP ECR Loans $55,120,000 82% Securities $28,615,000 67% Rate Sensitive Liabilities MMDAS $41,640,000 34% NOWS $37,260,000 90% CDs >= $100,000 $20,975,000 85% Using this information, how much will NII change if the prime rate rises 1%?
. Estimate the duration of Deposit NBank Balance SheetCash = $ 50Loan M (7%, 6 years) = $200Deposit N (3 years, 2%) = $ 200Equity = $ 50Total Assets = $250Total Liabilities = $ 250 a.1.94 b. 2.94 c. 3.94 d. 4.94
Question 3: Use the following information on Assets to calculate the weighted average duration for each asset type in the "fill in the box" at the bottom of table. Assets: 3 year Consumer Loans with an average interest rate of 7% Cash Flow (CF) $561,300 $766,010 $2,702,883 $0 $0 Present Value Factor (PVF) 5 Year Commercial Loans with an average interest rate of 10% Cash Flow (CF) $755,299 $1,254,503 $1,855,631 $3,214,131 $4,005,543 Present Value Factor (PVF) A. Calculate the weighted average duration for 3-year consumer loans. show in the x.xx format | B. Calculate the weighted average duration for 5-year commercial loans. show in the x.xx format .935 .873 .816 N/A N/A .909 .826 .751 .683 .621
. Estimate the duration of Loan MBank Balance SheetCash = $ 50Loan M (7%, 6 years) = $200Deposit N (3 years, 2%) = $ 200Equity = $ 50Total Assets = $250Total Liabilities = $ 250 a. 3.1 years b. 4.1 years c. 5.1 years d. 6.1 years
Ratios Analyses: McCormick Refer to the information for McCormick above. Additional information for 20X3 it as follows (amounts in millions): Required: Next Level Compute the following for 20X3. Provide a brief description of what each ratio reveals about McCormick 1. return on common equity 2. debt-to-assets 3. debt-toequity 4. current 5. quick (McCormick uses cash and equivalents, short-term securities and receivables in their quick ratio calculation.) 6. inventory turnover days 7. accounts receivable turnover days 8. accounts payable turnover days 9. operating cycle (in days) 10. total asset turnover Use the following information for 14-17 and 14-18: The Hershey Company is one of the worlds leading producers of chocolates, candies, and confections. It sells chocolates and candies, mints and gums, baking ingredients, toppings, and beverages. Hersheys consolidated balance sheets for 20X2 and 20X3 follow.
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The debt is amortized by the periodic payment shown Compute (a) the number of payments required to amortize the debt, (b) the outstanding principal at the time indicated Debt PrincipalDebt Payment Payment Interval Conversion Period monthly Outstanding Principal After: 6th payment Interest Rate $16,000 $1,419 3 months 6% (a) The number of payments required to amortize the debt is Round up to the nearest integer.) (b) The outstanding principal is S (Round the final answer to the nearest cent as needed Round all intermediate values to six decimal places as needed).
PreviousBalance AnnualPercentageRate (APR)(as a %) MonthlyPeriodicRate FinanceCharge(in $) Purchasesand CashAdvances PaymentsandCredits NewBalance(in $) $2,490.00 % 1 1 4 % $ $1,374.98 $300.00 $