Calculating Fees on a Loan Commitment You have approeched your local bank for a

Question

Calculating Fees on a Loan Commitment You have approeched your local bank for a term of the loan be one-yeer Your bank has offered you the following terms: size of loan you teke down 90 percent of the total loan commitment ceiculete e start-up loan commitment for $1700,000 needed to open an au repsir store commitment $1700,000 term 1 year r,up-front fee 15 besis points, back-end See- . You have requested that th 30 besis points the totel fees you have peid on this loan commitment O $ 5100 O $ 2.550 O s 7140 O $ 3060

Explanation / Answer

Solution:

Up- front fee = $1,700,000* 0.0015= $2,550

Back-end fee = $1,700,000*90% * 0.0030 = $4,590

Total fees paid on the laon commitment = $2,550+4,590 = $7,140

Thus, answer is option c. $7,140

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