Calculating Fees on a Loan Commitment You Have Approached Your

question 89

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 a car 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,and rate on the loan = 9 percent.If you immediately take down $750,000 and no more during the year,what is the total interest and fees you have paid on this loan commitment?

• A)$70,250
• B)$70,750
• C)$74,500
• D)$93,250

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Definitions:

Demand for Labor

The total amount of workers that employers want to hire at a given wage rate, in a given period.

Return on Capital

A measure of a company's profitability, calculated as the profit generated by its capital investment, often expressed as a percentage.

Immigration

Establishing permanent residence in a nation other than the one where you originally belong.

Productivity

The measure of how efficiently production inputs, such as labor and capital, are converted into outputs, i.e., goods and services.