4) Effective annual cost of a bank credit facility. Interest Expense + Committment Fee Effective Cost = Usable Funds Borrowed A. On an average daily basis, Memphis Metro borrows $400,000 from a $500,000 committed credit line. The annual interest expense paid is $14,500 and the commitment fee is $500. Calculate the effective cost of this line of credit. B. Recalculate the effective cost if the bank now requires compensating balances of 5%