A Bank Expects to Raise $20 Million in New Money

Multiple Choice

A bank expects to raise $20 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%,$100 million in new money if it pays a deposit rate of 8%,and $120 in new money if it pays a deposit rate of 8.5%.The bank expects to earn 9.5% 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 deposits rates?

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