1. The following three one-year "discount" loans are available toyou:
Loan A: $120,000 at a 7 percent discount rate
Loan B: $110,000 at a 6 percent discount rate
Loan C: $130,000 at a 6.5 percent discount rate
a. Determine the dollar amount of interest you would pay oneach loan and indicate the amount of net proceeds each loanwould provide. Which loan would provide you with the mostupfront money when the loan takes place?
b. Calculate the percent interest rate or effective cost of eachloan. Which one has the lowest cost?
4. ATM Banc has the following liabilities and equity categories:
Deposits $9 million
Other liabilities $4 million
Owners' capital ?
Total liabilities and capital ?
a. What would be the bank's total liabilities and capital ifowners' capital were half the size of other liabilities?
b. If total liabilities and capital were $15.5 million, what wouldbe the amount of the loans?
c. If total liabilities and capital were $14 million, and $1 millionof deposits were withdrawn from the bank, what would bethe amount of the owners' capital?
7. Rearrange the following accounts to construct a bank balancesheet for Second National Bank. What are the total amounts thatmake the bank's balance sheet balance?
Demand deposits: $20 million Government securities owned: $7 million
Cash assets: $5 million Bank fixed assets: $14 million
Loans secured by real estate: Time and savings deposits:
$30 million $40 million
Commercial and industrial loans: Federal funds purchased:
$18 million $6 million
Owners' capital: $6 million Other long-term liabilities: $2 million