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The Banque de Ghaban, Inc. has awarded a $5 billion revolving credit at 12% stated interest rate for 1 year to the Kangalistan, renewable for
The Banque de Ghaban, Inc. has awarded a $5 billion revolving credit at 12% stated interest rate for 1 year to the Kangalistan, renewable for 5 years; given their desperate situation, Kangalistan would like to maximize the borrowing from the loaned amount after neting all related expenses. Banque de Ghaban only requires 18% compensating balance on borrowed funds; and a nominal 1.5% commitment fee on unavailed credit. Make the 5 years revolving credit schedule for Kangalistan, while analyzing the cost of borrowing.
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