Glenville Bank is currently faced with high demand for additional new loans: $50...
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Glenville Bank is currently faced with high demand for additional new loans: $50m in household loans, and $30m in business loans. The bank has decided to finance this new pool of loans using the following funding mix:
- Household loans to be funded by savings deposits (35%), fixed deposits (55%), and equity (10%);
- Business loans to be funded by fixed deposits (25%), certificates of deposit (60%), and equity (15%).
Calculate the pooled marginal cost of funds for the household loan funding mix in percentage terms, given the following information for Glenville Bank:
Funding Source | Marginal Cost of Funds (per annum) |
Savings deposits | 5.5% |
Fixed deposits | 7.5% |
Certificates of deposit | 9% |
Equity | 12% |
NOTE: By default, the unit of the answer is %. Enter your answer with TWO (2) decimal places. For example, if your answer is 9%, enter 9.00.