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 is the marginal cost of deposits if the bank raises their deposit rate from 8 to 8.5%?

A) 11%
B) 8.75%
C) 7.75%
D) 7%
E) 0.5%