13-104 Assume 50 Percent of the Loan Is Drawn and That

13-104 Assume 50 percent of the loan is drawn and that there are reserve requirements of 10 percent on demand deposits.What should the bank charge as back-end fees if they require an expected return of 13.63 percent? Do not take future values of fees or interest income received.

A) 5 basis points.
B) 10 basis points.
C) 15 basis points.
D) 20 basis points.
E) 25 basis points.