Calculate the risk-adjusted return on capital (RORAC) on a corporate loan portfolio given the following information: Corporate loan portfolio: $100 million Headline return: 10% per annum (pa) Operating direct cost pa: $3 million Effective tax rate: 30% Transfer price of funding: 5% pa Economic capital: 7.5% of loan portfolio Risk-free interest rate on government securities: 2% pa Expected loss on the portfolio: 1%

a. 9.33% b. 10.73% c. 12.83% d. 15.33%