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In: Finance
Central Bank plans to launch a new deposit campaign next week in hopes of bringing in...
Central Bank plans to launch a new deposit campaign next week in hopes of bringing in from $150 million to $650 million in new deposit money, which it expects to invest at a 11.75 percent yield. Management believes that an offer rate on new deposits of 5.75 % would attract $150 million in new deposits and rollover funds. To attract $200 million the bank would probably be forced to offer 6.5%. The bank forecasts suggest that $350 million might be available at 7 %, $475 million at 7.5%, $550 million at 8.5 % and $650 million at 9.5 %. What volume of deposits should the bank try to attract to ensure that marginal cost does not exceed marginal revenue?
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jeff jeffy answered 2 years agoRelated Solutions
Central Bank plans to launch a new deposit campaign next week in hopes of bringing in...
Central Bank plans to launch a new deposit campaign next week in
hopes of bringing in from $150 million to $650 million in new
deposit money, which it expects to invest at a 12.75 percent yield.
Management believes that an offer rate on new deposits of 5.75 %
would attract $150 million in new deposits and rollover funds. To
attract $200 million the bank would probably be forced to offer
6.5%. The bank forecasts suggest that $350 million might be...
Central Bank plans to launch a new deposit campaign next week in hopes of bringing in...
Central Bank plans to launch a new deposit campaign next week in
hopes of bringing in from $150 million to $650 million in new
deposit money, which it expects to invest at a 11.75 percent yield.
Management believes that an offer rate on new deposits of 5.75 %
would attract $150 million in new deposits and rollover funds. To
attract $200 million the bank would probably be forced to offer
6.5%. The bank forecasts suggest that $350 million might be...
Lauren plans to deposit $5000 into a bank account at the beginning of next month and...
Lauren plans to deposit $5000 into a bank account at the
beginning of next month and $200/month into the same account at the
end of that month and at the end of each subsequent month for the
next 5 years. If her bank pays interest at the rate of 3%/year
compounded monthly, how much will Lauren have in her account at the
end of 5 years? (Assume that no withdrawals are made during the
5-year period)
Lauren plans to deposit $9000 into a bank account at the beginning of next month and...
Lauren plans to deposit $9000 into a bank account at the
beginning of next month and $150/month into the same account at the
end of that month and at the end of each subsequent month for the
next 4 years. If her bank pays interest at a rate of 5%/year
compounded monthly, how much will Lauren have in her account at the
end of 4 years?
(Assume she makes no withdrawals during the 4-year period. Round
your answer to the...
Alexandra plans to deposit $1,000 into a fund at the end of each of the next...
Alexandra plans to deposit $1,000 into a fund at the end of each
of the next eight years. If her fund earns 4.75 percent compounded
annually, how much will she have at the end of eight years?
A. $8,340
B. $8,525
C. $8,856
D. $9,297
E. $9,464
Randolph will receive a 20-year annuity with annual payments of
$150. The first payment will be received at the end of Year 1, and
the last payment will be received at the end...
Derek can deposit $266.00 per month for the next 10 years into an account at Bank A. The first deposit will be made next month. Bank A pays 12.00%
Derek can deposit $266.00 per month for the next 10 years into an account at Bank A. The first deposit will be made next month. Bank A pays 12.00% and compounds interest monthly. Derek can deposit $2,572.00 per year for the next 10 years into an account at Bank B. The first deposit will be made next year. Bank B compounds interest annually. What rate must Bank B pay for Derek to have the same amount in both accounts after...
The Gravy Company has decided to launch a new advertisement campaign in grocery stores to promote...
The Gravy Company has decided to launch a new advertisement
campaign in grocery stores to promote their products. The idea is
to put small signs in the meat section (next to the Turkey, Ham,
etc.) which read, "Get on board to the gravy train! The company
wonders whether the different groups of consumers who eat different
meats also have different gravy preferences. The table below is
from a random sample of college students. The row denotes whether
the student's family...
Corporation A plans to launch a new project and the financial manager is considering whether this...
Corporation A plans to launch a new project and the financial
manager is considering whether this is a valuable investment for
the corporation. Consider: The initial cost of this project is
$197.92, and it offers cash flows in the next 3 years, with an
estimated cash flow of $ 50 in the first year, $100 in the second
year and $150 in the third year. Questions: 1. What is the Internal
Rate of Return (IRR) of this project? 2. If...
Natasha plans to deposit $4000 per year in her account for each of the next 4...
Natasha plans to deposit $4000 per year in her account for each
of the next 4 years. Thereafter, she expects to deposit $1500 per
year for another 4 years. All deposits are made at year-end.
Interest rates are expected to be 8 percent for the next 2 years,
and 11 percent thereafter. Interest is compounded annually. (a)
What will Natasha's bank balance be at the end of year 8? (b) How
much would Natasha have to deposit as a lump...
If Company XYZ plans to launch a new production line, and in year 1, will have...
If Company XYZ plans to launch a new production line, and in
year 1, will have sales
revenue
$10,000,000,
operating cost is 70% of the sales revenue, depreciation is
$2,000,000, and tax rate
is
40%, what is the Company’s projected cash flow in year 1?
b. If
the Company’s launch of the new production line will cause the exit
of an existing production line
that can
generate $1,000,000 operating income before tax, how much will be
the Company’s
projected...
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