B C E Chapter 17 Problem 05 Input Area: Term for loan (years) Amount of loan Annual interest rate of loan Amount of CD CD interest rate Loan commitment fee Cash management fees 1 10,000,000 6.00% 3,000,000 2.75% 0.75% 3.00% Average annual amount of cash managed 15,000,000 Recommended before tax rate of return over all costs. 4.00% Expected cost of additional funds need to support loan 4.00% Labor costs and other operating expenses associated with monitoring the cusomer's loan 2.00% Cost of processing the loan 1.50% Output Area: Estimated Revenues: Interest Income from loan Loan commitment fees Cash management fees Total Revenues Estimated Expenses Interest to be paid on customers CD Expected cost of additional funds need to support loan Labor costs and other operating expenses associated with monitoring the cusomer's loan Cost of processing the loan Total Costs Total Revenues Total Costs Net Amount of loanable funds supplied Annual before-tax rate of return over costs from relationship