A $200 million loan commitment has an up-front fee of 20 basis points and a back-end fee of 25 basis points on the unused portion. If 25 percent of the commitment is taken down, the total fees are
A)$250,000.
B)$4,000,000.
C)$400,000.
D)$775,000.
E)$375,000.

Question

Quizplus · Accepted Answer

The up-front fee is 0.002 * $200,000,000 = $400,000. The unused portion is 75% of $200,000,000 = $150,000,000. The back-end fee is 0.0025 * $150,000,000 = $375,000. Total fees = $400,000 + $375,000 = $775,000.

A $200 Million Loan Commitment Has an Up-Front Fee of 20