Calculating Fees on a Loan Commitment During the Last Year

question 9

Multiple Choice

Calculating Fees on a Loan Commitment 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:

Cardiovascular Disease

A class of diseases that involve the heart or blood vessels, including coronary artery disease, heart attack, and stroke.

Cigarette Smoking

The act of inhaling smoke from the combustion of tobacco products, which is known to be harmful to health.

Stage 2 Hypertension

A condition where blood pressure readings consistently show systolic pressure of 140 mm Hg or higher or diastolic pressure of 90 mm Hg or higher.

Blood Pressure

The force exerted by circulating blood on the walls of blood vessels, a critical measure of cardiovascular function and health.