A company plans to issue $1 million worth of 270-day commercial paper with an effective yield of 5%. It plans to use stand-by letters of credit or loan commitments as collateral for the commercial paper. Using either tool would save 30 basis points.

(1). If the bank agrees to provide an upfront fee of 20 basis points, a 270-day standby letter of credit as collateral for commercial paper, what is the net savings of the company?

(2). If the bank agrees to a 270-day standby letter of credit as collateral for commercial paper and charges a 10 basis point upfront fee and a 10 basis point back-end fee, what is the net savings of the company?