Suppose that you are the consultant to an agricultural cooperative that is deciding whether members should cut their production of cotton in half next year. the cooperative wants your advice as to whether this action will increase members' revenues. knowing that cotton (c) and soybeans (s) both compete for agricultural land in the south, you estimate the demand for cotton to be c = 3.5 −1.0 pc + 0.25 ps + 0.5i, where pc is the price of cotton, ps is the price of soybeans, and i is income. should you support or oppose the plan?

Variable rate cd’s = $90 treasury bills = $150 discount loans = $20 treasury notes = $100 fixed rate cds = $160 money market deposit accts. = $140 savings deposits = $90 fed funds borrowing = $40 variable rate mortgage loans $140 demand deposits = $40 primary reserves = $50 fixed rate loans = $210 fed funds lending = $50 equity capital = $120 a. develop a balance sheet from the above data. be sure to divide your balance sheet into rate-sensitive assets and liabilities as we did in class and in the examples. b. perform a standard gap analysis and a duration analysis using the above data if you have a 1.15% decrease in interest rates and an average duration of assets of 5.4 years and an average duration of liabilities of 3.8 years. c. indicate if this bank will remain solvent after the valuation changes. if so, indicate the new level of equity capital after the valuation changes. if not, indicate the amount of the shortage in equity capital.