The CEO wants your CRO opinion on the attractiveness of a large loan opportunity with a healthcare company benefiting from the current vaccination business. The banks threshold cost of capital is 10%. The loan proposal is for an outstanding amount of $1,500m. Pricing is estimated at 1.20%, net of funding costs. The RWA risk-weight is assumed to be 65% of the exposure amount and the credit expected loss 1%. You may consider operating costs, tax charges, and any other elements to be immaterial.

(e) Compute the RAROC of the deal and conclude whether it is accretive.

(10 marks)