Problem 22-3 (LG 22-1) Consider the following balance sheet for Watchover Savings, Inc. (in millions): Assets Liabilities and Equity Floating-rate...

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Problem 22-3 (LG 22-1)
Consider the following balance sheet for Watchover Savings,Inc. (in millions):
Assets Liabilities and Equity
  Floating-rate mortgages
     (currently 11% p.a.) $ 62   Now deposits
     (currently 7% p.a.) $ 106
  30-year fixed-rate loans
     (currently 8% p.a.) 91   5-year time deposits
     (currently 7% p.a.) 26
  Equity 21

  Total $ 153   Total $ 153
a.
What is Watchover’s expected net interest income at year-end?(Enter your answer in millions rounded to 2 decimal places.(e.g., 32.16))
  Net interest income $  million
b.
What will be the net interest income at year-end if interestrates rise by 1 percent? (Enter your answer in millionsrounded to 2 decimal places. (e.g., 32.16))
  Net interest income $  million
c.
Using the one-year cumulative repricing gap model, what is thechange in the expected net interest income for a 1 percent increasein interest rates? (Negative amount should be indicated bya minus sign. Enter your answer in millions rounded to 2 decimalplaces. (e.g., 32.16))
  Net interest income $  million

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Problem 22-3 (LG 22-1)Consider the following balance sheet for Watchover Savings,Inc. (in millions):AssetsLiabilities and Equity Floating-rate mortgages (currently 11% p.a.)$62 Now deposits (currently 7% p.a.)$106 30-year fixed-rate loans (currently 8% p.a.)91 5-year time deposits (currently 7% p.a.)26 Equity21 Total$153 Total$153a.What is Watchover’s expected net interest income at year-end?(Enter your answer in millions rounded to 2 decimal places.(e.g., 32.16)) Net interest income$ millionb.What will be the net interest income at year-end if interestrates rise by 1 percent? (Enter your answer in millionsrounded to 2 decimal places. (e.g., 32.16)) Net interest income$ millionc.Using the one-year cumulative repricing gap model, what is thechange in the expected net interest income for a 1 percent increasein interest rates? (Negative amount should be indicated bya minus sign. Enter your answer in millions rounded to 2 decimalplaces. (e.g., 32.16)) Net interest income$ million


Assets			Liabilities and Equity
Floating-rate mortgages (currently 11% p.a.)	$	62	Now deposits (currently 7% p.a.)	$	106
30-year fixed-rate loans (currently 8% p.a.)		91	5-year time deposits (currently 7% p.a.)		26
			Equity		21

Total	$	153	Total	$	153