Information:

The bank has granted ABC Corp. a revolving credit and SBLC facility with the following terms:

RCF Facility:

US$2,000,000.00

RCF Spread/interest:

1.75%

per annum over prime rate

Commitment Fee:

0.50%

per annum on the undrawn portion

SBLC Facility:

US$1,000,000.00

SBLC Fee:

1/8%

per annum on the drawn portion

Facility balance and interest rate movements in Jan 2018:

ABC Corp. has a drawdown against its RCF Facility of US$1,500,000 on Jan 1, 2019 and $250,000 on Jan 26, 2019.

Prime rate changed from 3.5% to 3.75% on Jan 22, 2019. An SBLC was issued on Jan 2, 2019 for US$250,000.00.

Cost of Funds Rate:

Question:

1. Please compute the loan commitment fee and interest income and SBLC fee income which the bank should recognize in the Month of Jan 2019 for ABC Corp.

2. Please compute the Net Interest Income on ABC Corp. assuming the Cost of Funds is Prime rate plus 50bps.