Question: Starr Co. has been approved for a $100,000 loan commitment from its local bank. The bank has offered the following terms: term = one year,

Starr Co. has been approved for a $100,000 loan commitment from its local bank. The bank has offered the following terms: term = one year, up-front fee = 75 basis points, back-end fee = 25 basis points, and rate on the loan = 8.00 percent. Starr expects to immediately take down $80,000 and no more during the year unless there is some unforeseen need. What is the total interest and fees Starr can expect to pay on this loan commitment?

Multiple Choice

$7,050
$7,175
$7,200
$7,400

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