6. A financial institution currently uses a base rate of 7%, charges an origination fee of 0.97% and requires a compensating balance of 20%. The Federal Reserve imposes a 10% reserve requirement on the bank's demand deposits. For a customer with a 5.2% risk premium, calculate the bank's ROA on the loan. (6 points) 7. A bank is considering a loan applicant for a $9,750,000 4-year loan. The servicing fee is expected to be 55 basis points and the bank's cost of funds, its RAROC benchmark, is 9%. The estimated maximum change in the borrower's risk premium is 7.2%. The loan's duration is 3.4956 years and current market interest rates for similar loans is 9.8%. Based on the RAROC model, should the bank make the loan? Why or why not? (10 points)