Question
A firm has a committed line of credit with a maximum of $2.5 million and an interest rate of 9% (EAR) with a certain bank.
A firm has a committed line of credit with a maximum of $2.5 million and an interest rate of 9% (EAR) with a certain bank. The commitment fee is 0.65% (EAR). The firm borrows $2 million at the start of the year, and then repays it at the end of the year. What is the total cost of the loan?
A) $193,000
B) $180,000
C) $183,250
D) $212,500
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started
Forecasting Principles And Practice
Authors: Rob J Hyndman, George Athanasopoulos
3rd Edition
0987507133, 978-0987507136
