Calculate the Total Fees a Firm Would Have to Pay

question 29

Multiple Choice

Calculate the total fees a firm would have to pay when its bank offers the firm the following loan commitment: A loan commitment of $1,500,000 with an up-front fee of 95 basis points and a back-end fee of 25 basis points. The take-down on the loan is 50 percent.

• A) $15,550
• B) $16,125
• C) $18,125
• D) $15,955

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Definitions:

Direct Labor

The cost of wages for employees who directly manufacture or produce goods.

Job-Order Costing System

A method of assigning costs to specific production batches or jobs, often used in manufacturing where the products are distinctly different.

Direct Labor Cost

The total cost of wages paid to employees who are directly involved in the production of a product or service.

Job-Order Costing System

A costing method used to collect and assign manufacturing costs to individual units or specific jobs.