A corporation is planning to issue $25 million worth of 270-day commercial paper. In order to reduce the interest rates by 75 basis points (per year), it plans to back this issue with a standby letter of credit or a loan commitment. The standby letter of credit is available for 35 basis points (per year) to be paid up-front. The loan commitment for $25 million is available for an up-front fee of 25 basis points (per year) and a 15 basis points back-end fee. What are the savings to the corporation if it obtains a standby letter of credit to back its $25 million issue of commercial paper?

Question 15 options:

A)

$60,250.

B)

$65,000.

C)

$75,000

D)

$85,000.

E)	None of the above.