I am trying to figure out a valuation analysis for a jumbo bank loan and was given the following information:
$1,000,000 loan amount, 3.125%, fully amortizing
Expense assuptions are: cost of funds 50bps, option cost 36 bps, servicing 25 bps, origination and loss 20 bps, spread of 2.3%.
Disc rate 5%
36 month life of loan
I am missing something as I am trying to determine the NPV and ROE…suggestions