Consider a loan portfolio of $100 million principal which pays an annual rate of 9%. The economic capital against such a loan is estimated to be $6 million (i. e. 6% of the loan). The capital can be invested in government securities returning 2% per annum. The $100 million should be raised by deposits with an interest rate of 6%. The bank has an operating cost of $1 million per annum. The expected loss on this portfolio is assumed to be 0.75% per annum. Please calculate the RAROC for this loan portfolio.

Owns a machine that can produce two specialized products. production time for product tlx is two units per hour and for product mtv is four units per hour. the machine’s capacity is 2,100 hours per year. both products are sold to a single customer who has agreed to buy all of the company’s output up to a maximum of 3,570 units of product tlx and 1,610 units of product mtv. selling prices and variable costs per unit to produce the products follow. product tlx product mtv selling price per unit $ 11.50 $ 6.90 variable costs per unit 3.45 4.14 determine the company's most profitable sales mix and the contribution margin that results from that sales mix.