A Bank Has $500 Million in Checking Deposits with Interest

Multiple Choice

A bank has $500 million in checking deposits with interest and non-interest costs of 6%,$250 million in savings and time deposits with interest and non-interest costs of 14%,and $250 million in equity capital with a cost of 25%.The bank has estimated that reserve requirements,deposit insurance fees and uncollected balances reduce the amount of money available on checking deposits by 15% and on savings and time deposits by 4%.What is the bank's before-tax cost of funds?

A) 15.00%
B) 12.75%
C) 13.29%
D) 15.74%
E) None of the options is correct