James also allocates wealth between youth and old age. he has no cash in his youthnow, but will inherit $3000 in his old age. he can lend and borrow at the bank at18% between time 1 and time 2. he has an investment opportunity that costs$12,000 now in his youth and has a payoff of $15,000 in his old age. this is the onlyinvestment opportunity available to him. what is the most he can consume in hisyouth? assume james cannot consume a negative amount in old age.

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.