The bank has determined the information below for one of its customers.
This customer wants to borrow $1,000,000 but will maintain an average deposit balance in its account of $200,000.
What is the interest rate the bank is charging the customer on the funds they have borrowed?
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Expected Revenues
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Expected Costs
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Interest Revenues
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$1,000,000
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Deposit Interest
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$30,000
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Commitment Fee
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$15,000
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Cost of Other Funds Raised
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$890,000
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Deposit Service Fees
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$5,000
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Loan Processing Costs
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$8000
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Agency Fees
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$6000
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Activity and Record Keeping Costs
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$16,000
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