A Bank Has $100 Million in Checking Deposits with Interest

Multiple Choice

A bank has $100 million in checking deposits with interest and non-interest costs of 8%,$600 million in savings and time deposits with interest and non-interest costs of 12%,and $100 million in equity capital with a cost of 26%.The bank has estimated that reserve requirements,deposit insurance fees and uncollected balances reduce the amount of money available on checking deposits by 20% and on savings and time deposits by 5%.What is the bank's before-tax cost of funds?

A) 13.44%
B) 13.25%
C) 15.33%
D) 19.17%
E) None of the options is correct