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  3. bank abc has a loan portfolio of 100 million repay

Bank ABC has a loan portfolio of 100 million repayable in five (5) years. Repayment...

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Accounting

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Bank ABC has a loan portfolio of 100 million repayable in five (5) years. Repayment is expected at 120 million assuming 100% repayment at the end of the five years. However, a default rate of 2% is anticipated with 20% recovery on defaults. Calculate the yearly rate of interest to be charged taking into account the default and recovery rates but before any inflation and expense charges. Select one: A. 4.091% B. 4.049% C. 4.134% D. 3.714% E. 3.893%

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