In order to help fund a loan request of $30 million for one year from one of its best customers, Derby Bank will borrow $15 million by selling CDs at a promised annual yield of 3.75 percent and also borrow $15 million in the Federal funds market at today's prevailing interest rate of 3.50 percent.Credit investigation and recordkeeping costs to process this loan application were an estimated $60,000.The Credit Analysis Division recommends a minimal 1 percent risk premium on this loan and a minimal profit margin of 0.5 percent. Using thecost-plus loan pricing model, what loan rate should be charged?

A.5.45%

B.7.25%

C.8.95%

D.5.20%

E.5.325%