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Given the following information, calculate the RAROC.
- Gross revenue: $8 million.
- Interest expense: $4 million.
- Economic capital: 10 million.
- Return on invested economic capital: 500,000.
- Operating costs associated with making the loan: $1.5 million.
- Expected loss on the loan: 300,000.
A. 42%.
B. 40%.
C. 5%.
D. 27%.
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