Question: An FI makes a loan commitment of $2,500,000 with an up-front fee of 50 basis points and a back-end fee of 25 basis points on the unused portion of the loan. The takedown on the loan is 50%.
What are the total fees earned by the FI at the end of the year, that is, in future value terms? Assume the cost of capital for the FI is 6%
I don't understand how the cost of capital fits into this problem... is it relevant at all?