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.