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Finance 17 Online
OpenStudy (anonymous):

Does it makes sense to put $100 Million of the following loans in our portfolio or sell them: *30 Year Fixed Rate Loans at 3.625%. *$100 Million of Loans *Average Life of such Loans is generally 7 years *Fund 90% of loans using Federal Home Loan Bank Borrowings of equivalent term (go to fhlbb.com and check equivalent classic advance rate). *Assume a one-time "expense" of 0.80% of the total $100 Million to be put in the loan loss reserve, but then in future years no expense needed. *10% of the funding is from our Capital *Consider a 40% Tax Rate *What is the Return on Equity

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