Calculate economic profits for both assets

Reference no: EM13924787

ABCD Bank has two assets (Credit Asset A and Credit Asset B) of $10m each. Capital adequacy is 8%. Net final return from both credit assets is estimated to be the same -$150,000/-. However, risk weighting is different - Credit Asset B requires 50% weighting while that of Credit Asset A is 100%. Calculate economic profits for both assets if the cost of capital is 10%.

Reference no: EM13924787

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