A firm has a $5 million revolving credit agreement with its bank at 1.5% over prime with a commitment fee of .5% unborrowed balance. What is the total cost of borrowing in a month when the prime rate is 8% if the firm borrowed $2 million prior to the beginning of the month and takes down an additional $1 million two thirds through the month on the 21 st? (Correct answers may differ due to rounding.)

a.

$20,833

b.

$19,583

c.

$21,875

d.

$20,417