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In exchange for a $300 million fixed commitment line of credit, your firm has agreed to do the following: 1. Pay 1.93 percent per quarter

In exchange for a $300 million fixed commitment line of credit, your firm has agreed to do the following:

1.

Pay 1.93 percent per quarter on any funds actually borrowed.

2.

Maintain a 4.5 percent compensating balance on any funds actually borrowed.

3.

Pay an up-front commitment fee of .45 percent of the amount of the line.

Based on this information, answer the following:

a.

Ignoring the commitment fee, what is the effective annual interest rate on this line of credit? (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.)

b. Suppose your firm immediately uses $115 million of the line and pays it off in one year. What is the effective annual interest rate on this $115 million loan? (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.)

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