If a bank invested $75 million in a two-year asset paying 12 percent interest per year and simultaneously issued a $75 million one-year liability paying 10percent interest per year, what would be the net interest income in two years if, at the end of the first year, all interest rates increased by 1.5 percentagepoints?Multiple ChoiceDecrease by $0.725 millionDecrease by $1.125 millionIncrease by $1.875 millionIncrease by $0.725 millionDecrease by $0.385 million

The interest rate keeping changing and the income of the bank depends on the interest rate and…

Answered: f a bank invested $75 million in a…

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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The annual operating and maintenance (O&M) expenses of a company are $195,000 at EOY I decreasing by $8,500 per year until EOY 10. If the annual interest rate is 12.75%, what is the future equivalent of the O&M expenses at EOY 10? O a. $4,095,071 O b. $3,965,421 O c. $3,002,041 O d. $904,172 O e. $3,131,691
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