A Bank Has $200 Million in Checking Deposits with Interest

Multiple Choice

A bank has $200 million in checking deposits with interest and non-interest costs of 4%,$400 million in savings and time deposits with interest and non-interest costs of 8%,and $200 million in equity capital with a cost of 24%.The bank has estimated that reserve requirements,deposit insurance fees,and uncollected balances reduce the amount of money available on checking deposits by 10% and on savings and time deposits by 5%.What is the bank's before-tax cost of funds?

A) 11.00%
B) 11.26%
C) 11.50%
D) 12.00%
E) None of the options is correct