If the bank in the Illustrations 5.1 and 5.2 desires to give its shareholders a return of 20 per cent, its assets amount to Rs. 10,000 crore, and its capital amounts to Rs. 1,000 crore, what should be the profit margin it should target for the borrower seeking Rs. 50 crore of credit, assuming that its cost of funds and servicing costs remain at the levels described above, and the risk premium is 0.731 as calculated above?
Desired return = 0.20 3 1000/10000 = 0.02
Therefore, the bank should target a minimum return or profit of 2 per cent on the transaction. The bank already has proposed a return of 3 per cent which is profitable for the bank.
Delivering a high-quality product at a reasonable price is not enough anymore.
That’s why we have developed 5 beneficial guarantees that will make your experience with our service enjoyable, easy, and safe.
You have to be 100% sure of the quality of your product to give a money-back guarantee. This describes us perfectly. Make sure that this guarantee is totally transparent.
Each paper is composed from scratch, according to your instructions. It is then checked by our plagiarism-detection software. There is no gap where plagiarism could squeeze in.
Thanks to our free revisions, there is no way for you to be unsatisfied. We will work on your paper until you are completely happy with the result.
