Calculating Fees on a Loan Commitment You Have Approached Your

question 51

Multiple Choice

Calculating Fees on a Loan Commitment You have approached your local bank for a start-up loan commitment for $1,000,000 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 = $1,000,000, term = 1 year, up-front fee = 20 basis points, back-end fee = 50 basis points, and rate on the loan = 9%. If you immediately take down $750,000 and no more during the year, what is the total interest and fees you have paid on this loan commitment?

• A) $70,250
• B) $70,750
• C) $74,500
• D) $93,250

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