During the Last Year You Have Had a Loan Commitment

question 75

Multiple Choice

During the last year you have had a loan commitment from your bank to fund working capital for your business. The total line available was $2,500,000, of which you took down $1,000,000. 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 $1,000,000) of $15,000 on this loan commitment. You remember that the back-end fee was 30 basis points. Calculate the front-end fee on this loan commitment.

• A) 30 basis points
• B) 42 basis points
• C) 60 basis points
• D) 70 basis points

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Definitions:

Palatine Tonsils

Lymphatic tissue located on each side of the throat that helps defend the body against infection by trapping pathogens.

Soft Palate

The flexible, muscular part at the back of the roof of the mouth, which closes off the nasal passages during swallowing.

Hard Palate

Floor of the nasal cavity that separates the nasal cavity from the oral cavity; composed of the palatine processes of the maxillary bones and the horizontal plates of the palatine bones; also called bony palate.

Bolus

A term used to describe a mass of substance, especially chewed food at the moment of swallowing.