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Bank of the Atlantic has liabilities of $4 million with an average maturity of two years paying interest rates of 4.0 percent annually. It has assets of $5 million with an average maturity of 5 years earning
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16 votes
16 votes
Bank of the Atlantic has liabilities of $4 million with an average maturity of two years paying interest rates of 4.0 percent annually. It has assets of $5 million with an average maturity of 5 years earning interest rates of 6.0 percent annually. What is the bank's net interest income for the current year

User Paceaux
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1 Answer

14 votes
14 votes

Answer:

the bank net interest income for the current year is $140,000

Step-by-step explanation:

The computation of the bank net interest income for the current year is shown below:

= (Interest earning assets × Interest rate earned)-(Interest bearing liabilities × Interest rate rate)

= $5,000,000 × 6% - $4,000,000 × 4%

=$300,000 - $160,000

= $140,000

Hence, the bank net interest income for the current year is $140,000

User Denis Fetinin
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