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You have approached your local bank for a start-up loan commitment for $390,000 needed to open a computer repair store. You have requested that the term of the loan be one year. Your bank has offered you the following terms: size of loan commitment = $390,000, term = one year, up-front fee = 25 basis points, back-end fee = 45 basis points. Assume you take down 80 percent of the total loan commitment. Calculate the total fees you will pay on this loan commitment. Total fees $ 16,752

You have approached your local bank for a start-up loan commitment for $390,000 needed to open a computer repair store. You have requested that the term of the loan be one year. Your bank has offered you the following terms: size of loan commitment = $390,000, term = one year, up-front fee = 25 basis points, back-end fee = 45 basis points. Assume you take down 80 percent of the total loan commitment. Calculate the total fees you will pay on this loan commitment. Total fees $ 16,752

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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You have approached your local bank for a start-up loan commitment for $390,000 needed to open a computer repair store. You have requested that the term of the loan be one year. Your bank has offered you the following terms: size of loan commitment = $390,000, term = one year, up-front fee = 25 basis points, back-end fee = 45 basis points. Assume you take down 80 percent of the total loan commitment. Calculate the total fees you will pay on this loan commitment. $ 16,752 Total fees
Transcribed Image Text:You have approached your local bank for a start-up loan commitment for $390,000 needed to open a computer repair store. You have requested that the term of the loan be one year. Your bank has offered you the following terms: size of loan commitment = $390,000, term = one year, up-front fee = 25 basis points, back-end fee = 45 basis points. Assume you take down 80 percent of the total loan commitment. Calculate the total fees you will pay on this loan commitment. $ 16,752 Total fees
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