Calculating Fees on a Loan Commitment You Have Approached Your

question 73

Multiple Choice

Calculating Fees on a Loan Commitment You have approached your local bank for a start-up loan commitment for $1,000,000 needed to open an auto repair store.You have requested that the term of the loan be one year.Your bank has offered you the following terms: size of loan commitment = $1,000,000,term = one year,up-front fee = 20 basis points,back-end fee = 50 basis points.If you take down 90 percent of the total loan commitment,calculate the total fees you have paid on this loan commitment.

• A)$2,000
• B)$2,500
• C)$5,000
• D)$6,500