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Eads National Bank has issued a one-year loan commitment of $10,000,000 for an up-front fee of 30 basis points. The back-end fee on the unused portion of the commitment is 12 basis points. Eads National requires a compensating balance of 8 percent as demand deposits. The bank's cost of funds is 6.25 percent, the interest rate on the loan is 9 percent, and reserve requirements on demand deposits are 10 percent. The customer is expected to draw down an average of 65 percent of the loan commitment for the year. What is the expected return on the loan without taking future values into consideration? Funds committed = $____- $____(compensating balances) + $_____(Reserve requirements on demand deposits) = $____. Expected rate of return = $_____/$____=_____% Calculate Eads National's expected return on the loan using the Formula without taking future values into consideration. f_1 = up front fee. f_2 = back end fee. td = take down proportion. BR = borrowing rate. m = risk premium b = compensating balance. RR = reserve requirement. Formula: Expected rate of return - l + k = l + f_1 + f_2(l - td) + (BR + m)td/td - [b(td)(l - RR)] Expected rate of return =