The ABC Banking Corp provides loans to corporations of every size. They are review a loan application for the ACME Products Corporation. ACME wants to borrow $10 million. The risk management department informs the line manager that they expect the probability of default to be 1.25% and the loss given default to be 37.5%. The bank plans on funding 90% of the loan with with deposits that cost the banks 1% and 10% of the loan will be funded with the banks equity. It costs the bank 2.25% of the loans value to run the bank and sucure funding. What interest rate should the bank charge the AMCE corporation it it want to ear 10% on its capital investment?

A) 2.25%

B) 4.62%

C) 2.37%

D) 0.46%