Question
Calculating Fees on a Loan Commitment During the last year you have had a loan commitment from your bank to fund inventory purchases for your
Calculating Fees on a Loan Commitment During the last year you have had a loan commitment from your bank to fund inventory purchases for your small business. The total loan available was $1,020,000, of which you took down $770,000. It is now the end of the loan commitment period and your bank is asking you to pay the back-end fees. You have misplaced the paperwork that listed the terms of the commitment, but you know you paid total fees (this does not include any interest paid to borrow the $770,000) of $7,870 on this loan commitment. You remember that the up-front fee was 60 basis points, what is the back-end fee on this loan commitment.
Multiple Choice:
A. 30 basis points
B. 70 basis points
C. 7 basis points
D. 3 basis points
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