0 42 First BanCorp.> 2001 Management also uses one year GAP analysis as a secondary technique for evaluating interest rate risk. The Corporation’s one year GAP fluctuated between a negative 16% and a positive 16% of assets during 2001. Management considers that the ranges of the GAP ratio achieved during 2001 are adequate, considering the Corporation’s net interest margin and capital ratios. These simulations are highly complex, and they use many simplifying assumptions which are intended to reflect the general behavior of the Corporation over the period in question, but there can be no assurance that actual events will parallel these assumptions in all cases. For this rea- son, the results of these simulations are only approximations of the true sensitivity of net interest income to changes in market interest rates. These simulations assume gradual upward or downward movements of interest rates over the first year, with the change totaling 200 basis points at the end of the twelve month period. Rates are then assumed to remain constant at their new year-end levels during the second year of the pro- jection. The balance sheet is divided into groups of similar assets and lia- bilities in order to simplify the process of carrying out these projections. As interest rates rise or fall, these simulations incorporate expected future lending rates, current and expected future funding sources and cost, the possible exercise of options, changes in prepayment rates, and other fac- tors which may be important in determining the future growth of net inter- est income. All computations are done on a tax equivalent basis, including the effects of the changing cost of funds on the tax-exempt spreads of cer- tain investments. The projections are carried out for First BanCorp on a fully consolidated basis. The same simulations were also carried out assuming that the Corporation would grow. As of December 31, 2001 the growing balance sheet simula- tions indicate that tax equivalent net interest income for 2002, the first year of the projection, would fall by $8.8 million (2.4%) under a rising rate scenario and would increase by $3.8 million (1.0%) with falling rates. For 2003, the second year of the projection, the growing balance sheet simula- tions showed that tax equivalent net interest income would have declined by $20.6 million (5.1%) assuming rising rates and would have increased by $1.9 million (0.5%) with falling rates, compared to a similar simulation with no change in rates. Assuming a no growth balance sheet as of December 31, 2001, tax equiv- alent net interest income for 2002, the first year of the projection, would decline by $6.2 million (1.7%) under a rising rate scenario and would increase by $1.9 million (0.5%) under falling rates. For 2003, the second year of the projection, the no growth balance sheet simulations showed that tax equivalent net interest income would have declined by $24.5 mil- lion (6.4%) under a rising rate scenario and would have increased by $6.2 million (1.6%) under falling rates, compared to a similar simulation with no change in rates. two year time horizon, assuming gradual upward and downward interest rate movements of 200 basis points in the first year, followed by constant rates (at the new higher or lower levels) in the second year. Simulations are carried out in two ways: (1) using a balance sheet which is assumed to be at the same levels  existing on the simulation date, and (2) using a balance sheet which has growth patterns and strategies  similar to those which have occurred in the recent past.