Question
The treasurer of NEW Corp., LLC, approached his banker for a line a credit. He anticipates needing no more than $3 million. The lender offers
The treasurer of NEW Corp., LLC, approached his banker for a line a credit. He anticipates needing no more than $3 million. The lender offers NEW Corp a line of credit of $5 million at LIBOR plus 4.0%, or 4.78% at the time of the loan, plus a commitment fee on the unused portion of the line of 50 basis points. What is NEW Corps annual cost for this line of credit?
| a. | 3.07% | |
| b. | 4.78% | |
| c. | 7.17% | |
| d. | 5.11% |
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PFIN
Authors: Randall Billingsley , Lawrence J. Gitman , Michael D. Joehnk
7th Edition
0357033612,0357033698
