Memphis Metro, a service$-$based firm that provides high$-$performance training for competitive junior

volleyball players, has a credir line with the following specifications:

Average daily borrowings of $$400,000$ on a $$500,000$ committed credit line

$.$ Annual interest expense on the credit line of $$14500,$

Commirment fee of $$500$

a$.$ Calculate the effective bor rowing cost for the credit line.

b$.$ Recalculate the effective cost of the credit line with a compensating bolance requirement of

spercent.

c$.$ Recalculate the effective cost of the credit line with a compensating balance requirement of

$10$ percent.

d$.$ Discuss why the effective borrowing cost increases for $a,b,$ and c$.$