The Brugger Corp. owned a farm, operated by Jason Weimer, who acted as the company’s business agent. Tri-Circle, Inc. was a farm equipment company. On behalf of Brugger, Weimer offered to buy from Tri-Circle certain equipment for use on the farm. Tri-Circle accepted the offer, using a pre-printed form. The form included a finance charge for late payment. Weimer’s offer had said nothing about finance charges, but he made no objection to the new term. Tri-Circle supplied the farm equipment but later alleged that Brugger had refused to pay for $12,000 worth of the supplies. Tri-Circle sued. In deciding whether Tri-Circle was entitled to finance charges, the court first inquired whether Brugger, Weimer, and Tri-Circle were merchants. Why did it look into that issue? Were they merchants?

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.