LNW Bank Is Charging a 12 Percent Interest Rate on a $5,000,000

LNW Bank is charging a 12 percent interest rate on a $5,000,000 loan. The bank also charged $100,000 in fees to originate the loan. The bank has a cost of funds of 8 percent. The borrower has a five percent chance of default, and if default occurs, the bank expects to recover 90 percent of the principal and interest.
-What is the expected return on the loan using the Moody's Analytics model?

A) 6.50 percent.
B) 5.50 percent.
C) 6.00 percent.
D) 14.0 percent.
E) 13.5 percent.