What calculation method is used for determining the financed Up Front Guarantee Fee?

The correct method for determining the financed Up Front Guarantee Fee involves dividing the base loan amount by 0.990. This calculation reflects the way that the guarantee fee is incorporated into the loan structure. By dividing the loan amount by 0.990, it ensures that the total financing covers both the original loan amount and the Up Front Guarantee Fee that is added to it, allowing for accurate loan calculations and ensuring that borrowers know the full extent of their financial obligations.

The other options represent different calculations that do not accurately represent the process of incorporating the Up Front Guarantee Fee. Specifically, option B suggests a simple multiplication of the loan amount by 1%, which does not factor in the additional context of the fee being financed into the loan. Option C inaccurately addresses the annual fee rather than the upfront fee, and option D implies a division of the annual fee which is not relevant to the calculation of financing the upfront fee. Therefore, the correct answer appropriately defines the calculation method required for the upfront guarantee fee.