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.
-The up-front fee is
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 calculated by multiplying the loan commitment by the up-front fee percentage. 
20 basis points is equivalent to 0.20%, so the up-front fee is:
$200,000,000 x 0.0020 = $400,000.

Therefore, the best choice is C.

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