In exchange for a $410 million fixed commitment line of credit, your firm has agreed to do the following:

1. Pay 2.4% per quarter on any funds actually borrowed.

2. Maintain a 4% compensating balance on any funds actually borrowed.

3. Pay an up-front commitment fee of 0.110% 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. Round the final answer to 2 decimal places.)

Effective annual interest rate:%

b.Suppose your firm immediately uses $180 million of the line and pays it off in one year. What is the effective annual interest rate on this $180 million loan?(Do not round intermediate calculations. Round the final answer to 2 decimal places.)

Effective annual interest rate:%