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Find commitment over one-year period

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ABC bank has issued a one-year loan commitment of $ 20 MM for an upfront fee of 0.5%. Fees on any unused portion of the loan is 0.25%.

The bank has a cost of funds of 7% and will charge an interest rate of 9%.

At the end of 6 months, there would be a drawdown of 50% of the committed amount followed by another 30% three months later.

The annual return of this loan commitment over this one-year period is:

Reference no: EM132999167

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