You own a coal mining company and at your current production level your direct production costs are $20 per unit, while you are selling your output for $40 per unit in a competitive coal market. also each unit of production leads to $5 worth of pollution damage. your production is heavily regulated by the us environmental protection agency and you have been given an initial allocation of tradable pollution permits freely to be able to produce at your current production level (note that one pollution permit gives the right to produce one unit of output). which of the following permit prices is the minimum price you would be willing to accept to entice you to sell one of your pollution permits
a) $63
b) $42
c) $26
d) $17

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.