The bank has determined the information below for one of its customers. This cus

Question

The bank has determined the information below for one of its customers. This customer wants to borrow $1,000,000 but will maintain an average deposit balance in its account of $200,000 What is the interest rate the bank is charging the customer on the funds they have borrowed? Revenues Costs Interest Revenues Commitment Fee Deposit Service Fees Agency Fees $1,000,000 $15,000 $5,000 $6000 Deposit Interest Cost of Other Funds Raised Loan Processing Costs Activity and Record Keeping Costs $30,000 $890,000 $8000 $16,000 A) 10.00 percent B) 12.50 percent C) 10.25 percent D) 13.75 percent E) None of the above Answer: A

Explanation / Answer

Is there any time period given for repayment?

If not, basic Linear programming equation gives multiple answers with two unknown variables (interest rates and time period) for this problem

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