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In exchange for a $450 million fixed commitment line of credit, your firm has agreed to do the following: 1. Pay 2.0 percent per quarter
| In exchange for a $450 million fixed commitment line of credit, your firm has agreed to do the following: |
| 1. | Pay 2.0 percent per quarter on any funds actually borrowed. |
| 2. | Maintain a 4 percent compensating balance on any funds actually borrowed. |
| 3. | Pay an up-front commitment fee of 0.150 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? |
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