In order to help fund a loan request of $40 million for one year from one of its best customers, Andover Bank will borrow $20 million from selling CDs at a promised annual yield of 3 percent and also borrow $20 million in the Federal funds market at today's prevailing interest rate of 2.8 percent.Credit investigation and recordkeeping costs to process this loan application were an estimated 0.2% of the loan amount.The Credit Analysis Division recommends a minimal 0.5 percent risk premium on this loan and a minimal profit margin of 1.25 percent. Using the cost-plus loan pricing model, what loan rate should be charged?(Show sufficient detail in order to receive credit)