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BabaBlast [244]
3 years ago
9

A bank has $500 in checking deposits. Interest and noninterest costs on these accounts are 6%. This bank has $250 in savings and

time deposits with interest and noninterest costs of 14%. This bank has $250 in equity capital with a cost of 25%. This bank has estimated that reserve requirements, deposit insurance fees and uncollected balances reduce the amount of money available on checking deposits by 15% and on savings and time deposits by 4%. What is the bank's before-tax cost of funds
Business
1 answer:
defon3 years ago
5 0

Answer:

<em>13.29%</em>

<em>Explanation:</em>

Answer :- Amount in checking deposit= $500 million-15%= $425 million

Amount in saving and time deposit= $250 million-4%= $240 million

Amount in equity capital = $ 250 million

banks before tax cost of funds=

checking deposit = $425*6/100= $25.5 million

Saving and time deposit= $ 240*14/100= $ 33.6 million

equity capital=$250 *25/100= $ 62.5 million

Weighted average cost of funds (WACC)= $25.5+33.6+62.5/($425+240+250)

=$121.6/915= 0.1329 or 13.29%

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Answer:

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Answer:

The minimum cost will be "$214085".

Explanation:

D = 1700 units \\\\S =  \$ 50 \\\\H=  20%\\

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ii) When quantity = 1501 -10,000,  price = $ 12.45 , and holding price is $12.45 * 20 %= $2.49.

iii) When quantity = 10,0001- and more,  price = $ 12.40 , and holding price is $12.40 * 20 %= $2.48.

EOQ= \sqrt{\frac{2DS}{H}} \\\\EOQ1= \sqrt{\frac{2\times 17000\times 50}{2.50}} \\\\EOQ1=824.62 \ \ \ or \ \ \ 825\\

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EOQ3= \sqrt{\frac{2\times 17000\times 50}{2.48}} \\\\EOQ3=827.93 \ \ \ or \ \ \ 828\\

know we should calculate the total cost of EOQ1 and break ever points (1501 to 10,000)units

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T_c  = \frac{17000}{1501} \times 50+  \frac{1501}{2} \times 2.49 + (12.45 \times 17000)\\\\T_c = 566.28 +1868.74+211650\\\\T_c =$ 214085.02 \ \ \ or \ \ \  $ 214085\\\\

T_c  = \frac{17000}{10001} \times 50+  \frac{10001}{2} \times 2.48 + (12.40 \times 17000)\\\\T_c = 84.99+ 12401.24+210800\\\\T_c =$ 223286.23 \\

The total cost is less then 15001. So, optimal order quantity is 1501, that's why cost is = $214085.

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