You Have Approached Your Local Bank for a Start-Up Loan

question 81

Multiple Choice

You have approached your local bank for a start-up loan commitment for $5,000,000 needed to open a car repair store. You have requested that the term of the loan be one year. Your bank has offered you the following terms: size of loan commitment = $5,000,000, term = one year, up-front fee = 30 basis points, back-end fee = 40 basis points, and rate on the loan = 8 percent. If you immediately take down $1,000,000 and no more during the year, what is the total interest and fees you have paid on this loan commitment?

• A) $150,000
• B) $111,000
• C) $87,000
• D) $80,000

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Definitions:

Supercenter

A large retail store that combines groceries and general merchandise goods in a single location.

Power Center

A concentration of powerful entities or organizations that collectively exert influence over a specific domain or sector.

Central Business District

The commercial and often geographical heart of a city, characterized by high densities of retail businesses, offices, and services.

Regional Shopping Center

A large shopping center designed to serve a large area or region, typically housing a variety of stores, services, and often major department stores as anchor tenants.