A. RFS is
considering adding a new product line Home Equity Loans which RFS believes will make the mortgage business more attractive to their customers. RFS research
shows they could originate 500 of these loans at $230 each. RFS would have to process a 3 page application obtain 2 credit referrals from outside credit
agencies do 2.5 hours of loan analysis and complete a 4 hour closing process with 85% of applications being closed. RFS believes existing resources in the
company can handle the additional application processing and loan analysis work. Using the cost driver rates you developed in part A compute the
estimated incremental and fully loaded profitability of this new line of business for RFS. Note: incremental analysis would only include the incremental
costs that result from adding home equity loans.