A Bank Expects to Raise $30 Million in New Money

Multiple Choice

A bank expects to raise $30 million in new money if it pays a deposit rate of 7%,$60 million in new money if it pays a deposit rate of 7.5%,$80 million in new money if it pays a deposit rate of 8%,and $100 million in new money if it pays a deposit rate of 8.5%.The bank expects to earn 9% on all money that it receives in new deposits.What deposit rate should the bank offer on its deposits,if it uses the marginal cost method of determining deposit rates?

A) 7%
B) 7.5%
C) 8%
D) 8.5%
E) None of the options is correct