Can you explain

QUESTION Fill in the blanks: A bank has a cost of funds of 12%, a default rate of 5% and an underwriting transaction cost of $25 per loan. To break even on a $100 loan, the bank must charge $12 to cover cost of funds, $5 to cover expected defaults, and $25 to cover transaction cost, totaling $42 or an interest rate of 42%. On a $300 loan, using the same costs above, the break even rate would be-%. The interest rate for the $100 loan is_ than the rate for the S300 loan due to smaller principal amount to be recovered. against a