During the Last Year You Have Had a Loan Commitment

question 71

Multiple Choice

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 $10,000,000, of which you took down $9,125,000. It is now the end of the loan commitment period and your bank had you 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 $9,125,000) of $31,100 on this loan commitment. You remember that the back-end fee was 85 basis points. Calculate the front-end fee on this loan commitment.

• A) 31 basis points
• B) 28 basis points
• C) 26 basis points
• D) 24 basis points

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Definitions:

Implied Warranty

A legal assumption that ensures goods are fit for their intended purpose, even if not explicitly stated.

Sales Contract

A formal agreement between a buyer and a seller detailing the terms of a transaction, including the sale of goods, services, or property.

Horizontal Privity

A legal relationship that exists between entities that share a mutual interest or right, particularly in property law.

Strict Liability

A legal doctrine that holds someone responsible for damages or harm without having to prove negligence or fault.