Instructions: For each question part requiring an answer in Excel, (1) clearly identify the inputs to the calculations,

(2) show the necessary interim calculations, adding rows and / or columns, if necessary, and
(3) enter the final answer in the cells highlighted in yellow below.
These cells should contain formulas with links to other calculations in the worksheet. Minimize the use of
hard-coded figures and maximize the number of interim steps in the calculations that would demonstrate
your line of thinking.
Commerical Banking Business Financial Data

Balance sheet 2027 2026

Loans 14,518.0 14,013.5
Total Assets 14,518.0 14,013.5
Deposits 11,540.5 11,145.2
Equity 2,977.5 2,868.3
Total Liabilities & Equity 14,518.0 14,013.5

Income Statement 2027 2026

Interest Income 646.8 621.9
Interest Expense 203.6 195.6
Operating Expense 13.3 15.6

Other 2027 2026

Beta 1.5
Risk Free Rate 3.8%
Market Risk Premium 2.0%
Growth Rate, 2027+ 3.50%
Deposit Interest Rate 2.9% 2.9%
Loan Interest Rate 4.8% 4.8%
Tax Rate 25.0%

Deposits Matched Opportunity Rate, % 3.0% 3.0%

Loans Matched Opportunity rate, % 3.4% 3.4%

(d) i. Value of Commerical Banking Business

(e) Economic Spread on the Loans for 2024

(e) Economic Spread on the Deposits for 2024

(f) i. Matched Capital Charge for 2024

(f) ii. Mismatched Capital Charge for 2024
 2025 2024 2023
13,507.0 13,000.0 12,738.0
13,507.0 13,000.0 12,738.0
10,743.7 10,338.0 10,127.0
2,763.3 2,662.2 2,611.0
13,507.0 13,000.0 12,738.0

2025 2024
598.0 575.0
187.9 180.5
14.3 12.2

2025 2024

3.0% 3.0%
5.0% 5.0%

3.1% 3.1%
3.6% 3.6%
 SEA: Exploring a new route

<< GIVEN MODEL PARAMETERS >>

( N ) Flights (per day)

( P ) Price per flight (per day)

( R ) Total revenues (per day)

( C ) Cost per flight (per day)

( I ) Income / (Loss) (per day)

<< CANDIDATES FILL OUT THIS SECTION >>

Questions relating to new route (simulation)

(b) i. Expected income over 100-days of the original route

(b) I. Expected income over 100-days of the new route

(b) ii. On any given day, what is the probability that the new route would earn more than the original?
(b) iii. On any given day, what is the probability that SEA will lose money on the new route?

100 Day Profitability:Original vs. New Route

12

Original
10
New Route
8

6
 12

Original
10
New Route
8

0
1 4 7 10 13 16 19 22 25 28 31 34 37 40 43 46 49 52 55 58 61 64 67 70 73 76 79

This chart isn't available in your version of Excel.

Editing this shape or saving this workbook into a different file format will permanently break the chart.
TERS >> << GIVEN INPUTS >>

Original New Route Random Numbers (0, 1)

(N)

Day N P Flights
1 Model Binomial 1 0.3853 0.4360
Probability 50.0% 2 0.3862 0.7955
Number 3.0 3 0.3648 0.4004
4 0.0461 0.1245
1000 Model Normal 5 0.9335 0.7075
Mean 1010 6 0.8040 0.8968
StdDev 200 7 0.1730 0.9495
8 0.5201 0.7248
1000 NxP 9 0.8954 0.4608
10 0.2532 0.3262
11 0.2453 0.2544
800 Flights ( N ) Cost 12 0.3556 0.4054
0 800 13 0.3626 0.8972
1 800 14 0.2328 0.2929
2 1550 15 0.0173 0.3570
3 2300 16 0.4757 0.5198
17 0.9019 0.9440
200 R-C 18 0.0321 0.4572
19 0.6835 0.3849
20 0.6579 0.6982
SECTION >> 21 0.5709 0.8704
22 0.9788 0.1084
23 0.2172 0.3920
24 0.2416 0.3928
25 0.1514 0.6344
26 0.3691 0.2657
27 0.0931 0.2029
han the original? 28 0.3597 0.9416
29 0.4085 0.0073
30 0.3571 0.1549
31 0.4689 0.5270
32 0.5163 0.2723
33 0.1326 0.2446
34 0.5766 0.8003
vs. New Route
35 0.6452 0.7789
36 0.8820 0.4202
37 0.9935 0.1920
38 0.7377 0.7884
 39 0.7670 0.7967
40 0.3592 0.1217
41 0.2981 0.8205
42 0.7421 0.2522
43 0.4503 0.9233
44 0.6867 0.3785
45 0.7798 0.0352
46 0.7257 0.9588
47 0.4137 0.8397
55 58 61 64 67 70 73 76 79 82 85 88 91 94 9 7 1 00
48 0.2498 0.0761
49 0.9376 0.4059
50 0.7934 0.7145
51 0.5867 0.8710
52 0.9130 0.5183
tly break the chart.
53 0.1484 0.3849
54 0.9176 0.7533
55 0.7668 0.0803
56 0.0375 0.7522
57 0.1748 0.2028
58 0.9458 0.5980
59 0.4784 0.0880
60 0.2350 0.9993
61 0.1916 0.3317
62 0.3916 0.8754
63 0.9998 0.2996
64 0.4218 0.3368
65 0.3676 0.3642
66 0.8591 0.0048
67 0.9726 0.1738
68 0.2986 0.3567
69 0.8320 0.7398
70 0.9387 0.4247
71 0.5332 0.5784
72 0.3130 0.0959
73 0.1258 0.8267
74 0.4465 0.3406
75 0.7543 0.2984
76 0.0974 0.7096
77 0.1794 0.4015
78 0.4137 0.3469
79 0.0289 0.3596
80 0.5542 0.1975
81 0.0680 0.9934
82 0.6165 0.6171
83 0.7259 0.0132
84 0.3392 0.8349
85 0.3309 0.2418
86 0.9466 0.2603
 87 0.0761 0.0618
88 0.5468 0.4080
89 0.7072 0.1359
90 0.8684 0.5051
91 0.5372 0.2868
92 0.3046 0.3299
93 0.6191 0.2694
94 0.9097 0.8361
95 0.5005 0.1611
96 0.5440 0.3455
97 0.6004 0.1834
98 0.1530 0.8909
99 0.1846 0.6769
100 0.2371 0.0084
 << CANDIDATES FILL OUT THIS SECTION >>

Original New Route

(P) (R) (C) (I) (N) (P) (R)
Income Cumulative
Price Revenue Cost (Loss) Income Flights Price Revenue
New Route
(C) (I)
Income Cumulative
Cost (Loss) Income