Estimating Sales Revenue
First City Bank (FCB) has $30 million in commercial loans with an average interest rate of 6 percent. The bank also has $24 million in consumer loans with an average interest rate of 8 percent. Finally, the bank owns $4.5 million in government securities with an average rate of 7 percent.
FCB estimates that next year its commercial loan portfolio will fall to $28 million, and the interest rate will fall to 5.5 percent. Its consumer loans will expand to $25 million with an average interest rate of 8.5 percent, and its government securities portfolio will increase to $6 million with an average rate of 6.5 percent.
Instructions:
Estimate FCB’s revenues for the coming year.