Calculating Fees on a Loan Commitment During the Last Year

question 50

Multiple Choice

Calculating Fees on a Loan Commitment 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 $25,000,000,of which you took down $20,000,000.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 $20,000,000) of $110,000 on this loan commitment.You remember that the back-end fee was 60 basis points.Calculate the front-end fee on this loan commitment.

• A)60 basis points
• B)32 basis points
• C)40 basis points
• D)16 basis points

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Definitions:

Surface Area

The total extent of the outer layer or covering of an object, often related to the rate of processes like absorption and evaporation.

Volume

Volume is the amount of space that an object or substance occupies, measured in cubic units.

Cilia

Microscopic, hair-like structures on the surface of cells that move in a wave-like manner to transport substances or propel cells.

Intermediate Filaments

A type of cytoskeletal component in cells, providing structural support and playing a role in cell integrity and tissue cohesion.