Bell brewery paid $1,000,000 for land three years ago. bell estimates it can sell the land for $1,200,000, net of selling costs. if the land is not sold, bell plans to develop the land at a cost of $1,500,000. bell estimates net cash flow from the development in the first year of operations would be $500,000. what is bell's opportunity cost of the development?
a. $1,500,000
b. $1,000,000
c. $1,200,000
d. $500,000

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.