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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