Suppose that a bank does the following:

a. Sets a loan rate on a prospective loan at 8 percent (where BR = 5% and ϕ = 3%).

b. Charges a 1 ⁄ 10 percent (or 0.10 percent) loan origination fee to the borrower.

c. Imposes a 5 percent compensating balance requirement to be held as non-interestbearing demand deposits.

d. Holds reserve requirements of 10 percent imposed by the Federal Reserve on the bank’s demand deposits.

Calculate the bank’s ROA on this loan.