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:

SAT-M Score

The SAT-M score denotes the math section score of the SAT, a standardized test widely used for college admissions in the United States, assessing mathematical proficiency.

Normally Distributed

A descriptor for a dataset or population in which the data follow a bell-shaped curve symmetry about the mean.

Mean Change

The difference in the average values or mean scores of a dataset between two points in time or conditions.

Carbonyl Stretching Frequency

The specific frequency at which the carbonyl group (C=O) vibrates in an infrared spectrum, used to identify the presence of carbonyl-containing compounds.