Estimate the RAROC on a $$1,000,000$ loan application by a client in the construction industry.

Using a $95\%$ level of confidence, the bank projects the economic capital to be $4\mathrm{.}50\%$ on loans to firms in the construction industry.

If the minimum RAROC established by the bank is $14\%,$ is the loan meeting the minimum requirements for approval?

b$.$ What should be the maximum interest expense for the bank to approve the loan?