Calculating Fees on a Loan Commitment During the Last Year

question 18

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 $300,000.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 $300,000) of $5,000 on this loan commitment.You remember that the up-front fee was 75 basis points.What is the back-end fee on this loan commitment?

• A)6 basis points
• B)62.5 basis points
• C)75 basis points
• D)2.5 basis points

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