Question: Caseys One Stop has been approved for a $127,500 loan commitment from its local bank. The bank has offered the following terms: term = one

Casey’s One Stop has been approved for a $127,500 loan commitment from its local bank. The bank has offered the following terms: term = one year, up-front fee = 85 basis points, back-end fee = 35 basis points, and rate on the loan = 7.75 percent. Casey’s expects to immediately take down $119,000 and no more during the year unless there is some unforeseen need. Calculate the total interest and fees Casey’s One Stop can expect to pay on this loan commitment.

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