Calculate the bank return on this loan

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Reference no: EM132004348

Sets a loan rate on a prospective loan at 11 percent (where BR = 6% and m = 5%).

Charges a 1/5 percent (or 0.20 percent) loan origination fee to the borrower.

Imposes a 7% compensating balance requirement as noninterest-bearing demand deposits.

Pays reserve requirements of 9 percent imposed by the Fed on the bank’s demand deposits.

Calculate the bank’s return on this loan.

Reference no: EM132004348

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