Computing the size of the fi after changes

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Netbank has assets of $15 million consisting of $1 million in cash and 14 Million in loans. Netbank has core deposits of $8 million, subordinated debt of $4 million and equity of $3 million. Suppose one of the banks business customers decides to exercise its loan commitment by borrowing $2 million at the pre-specified rate of 9%.

If the bank decides to purchase liquidity and the interest cost of issuing new short-term debt is expected to be 8%, what will be the effect on net interest income? What will be the size of the FI after these changes?

Reference no: EM132951456

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