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 todays 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 the cost-plus loan pricing model, what loan rate should be charged?

	A.	5.45%
	B.	8.95%
	C.	7.25%
	D.	5.325%
	E.	5.20%