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4. Followings are the information of Mowgli Bank Ltd. Term for loan (years) Amount of loan Annual interest rate of loan Amount of CD

 

4. Followings are the information of Mowgli Bank Ltd. Term for loan (years) Amount of loan Annual interest rate of loan Amount of CD CD interest rate Loan commitment fee Cash management fees Average annual amount of cash managed Recommended before tax rate of return over all costs Expected cost of additional funds need to support loan Labor costs and other operating expenses associated with monitoring the cusomer's loan Cost of processing the loan 1 10,000,000 6.00% 3,000,000 2.75% 0.75% 3.00% 15,000,000 4.00% 4.00% 2.00% 1.50% Calculate the cost of the loan and If recommended before tax rate of return over all costs is 4%, should the loan be approved. (15)

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