Bank Three has equity = $250 million, return on equity (ROE) = 15%, interest expense = $105 million,provision for loans (P) = $30 million, noninterest income = $45 million, noninterest expense = $20 millionand a tax rate = : 34%.What is the total interest income required?A. $216.82 million.B. $236.82 million.C. $146.82 million.D. $166.82 million.

Banks accepts deposits but also gives the loand to borrowers so they have interest income but they…

Answered: Bank Three has equity = $250 million,…

Essentials Of Investments

11th Edition

ISBN:9781260013924

Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Chapter1: Investments: Background And Issues

Section: Chapter Questions

Problem 1PS

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Bank A receives $70 in deposits at 5% and, together with 40 in equity, makes a loan of $90 at 7%. The remaining of assets is G-Bond. We will ignore taxes for the moment. NIM=Profit/Interest revenue Bank A Loan 7% $90 G-Bond 5% ? Deposits 5% $70 Equity $40 Total Assets $? Total Equity and Deposit $110 Given G-bond’s interest rate is 5%, Profit is equal to $4.9 $3.8 $4.0 $2.9 $3.1 $3.3 $20 $10
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Bank Three has equity = $250 million, return on provision for loans (P) = $30 million, noninterest i and a tax rate = 34%. What is the total interest income required? A. $216.82 million. B. $236.82 million. C. $146.82 million. D. $166.82 million.