If a bank has a before tax capital charge of 1.5%, a cost of liabilities to fund a loan of 5%, a required loan loss provision of 1.25%, another direct cost expense of 0.80%, and indirect expense of 0.40%, and an overhead expense of 0.50%, what will be the total required loan rate for this loan?

Question

Quizplus · Accepted Answer

: Total Required Loan rate = 1.5% + 5% + 1.25% + 0.80% + 0.40% + 0.50% = 9.45%

If a Bank Has a Before Tax Capital Charge of 1.5