Based on the optimal interest rate and the estimate for loan losses what will charge on its commercial loans to offset its expected loan losses?
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a bank has a commercial loan portfolio of $50 million dollars. based on historic trend analysis it estimates
that 50% of outstanding principal is not paid back. the bank determines 7% is the optimal interest rate to
charge on consumer loans. Based on the optimal interest rate and the estimate for loan losses what will
charge on its commercial loans to offset its expected loan losses? show your answer to four decimal
places in a numeric format (if answer is 9.75% enter is .0975).
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