Finance Probblem

Using the RAROC model: A bank is considering making a $10,000,000 loan to a steel company. The rate for these firms is 10%, and the risk premium is 0.20%. In addition, they expect to charge fees of 0.15%. The extreme loss rate for this company has historically been 4%, and if default occurs, the loss has historically been 85%. If the cost of funds (and benchmark is 10%) should the bank make the loan? Why or why not?

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