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Calculate the profit of the financial institution in year 2

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Suppose a financial institution has 5,000,000 in assets with a 1 year maturity that earn a 5.65% return. The financial institution funds these assets with a 5,000,000 two year loan for which they pay 3.05%. Suppose the financial institution is able to invest in assets that pay a 2.95% return in year 2. Calculate the profit of the financial institution in year 2.

Reference no: EM132813631

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