An Fl is planning to give a loan of $5,000,000 to a firm in the steel industry. It expects to charge an up-front fee of 0.10% and a service fee of 5 basis points. The loan has a maturity of 8 years. The cost of funds (and the RAROC benchmark) for the FI is 10%. The FI has estimated the risk premium on the steel manufacturing sector to be approximately 0.18%, based on two years of historical data. The current market interest rate for loans in this sector is 10.1%. The 99th (extreme case) loss rate for bororowers of this type has historically run at 3%, and the dollar proportion of loans of this type that cannot be recaptured on default has historically been 90%. Using the RAROC model, should the FI make the loan? ( 30 marks)