During the Last Year You Have Had a Loan Commitment

question 7

Multiple Choice

During the last year you have had a loan commitment from your bank to fund inventory purchases for your small business. The total line available was $500,000, of which you took down $400,000. It is now the end of the loan commitment period and your bank is asking you to pay the back-end fees. You have misplaced the paperwork that listed the terms of the commitment, but you know you paid total fees (this does not include any interest paid to borrow the $400,000) of $1,750 on this loan commitment. You remember that the up-front fee was 25 basis points. What is the back-end fee on this loan commitment?

• A) 5 basis points
• B) 50 basis points
• C) 10 basis points
• D) 20 basis points

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Definitions:

Atmospheric Pressure

The pressure exerted by the weight of the atmosphere, crucial for weather patterns and breathing.

Sea Level

The average level of the surface of the ocean at any given place, used as a standard in calculating land elevation and water depth.

Hydraulic Pressure

The pressure exerted by a fluid in a hydraulic system, used to generate force and motion in hydraulic machinery and tools.

Steering Systems

Mechanisms in vehicles that allow the driver to guide and direct the direction of the vehicle.