Sanders Enterprises Arranged a Revolving Credit Agreement of $9,000,000 with a Group

question 131

Multiple Choice

Sanders Enterprises arranged a revolving credit agreement of $9,000,000 with a group of banks.The firm paid an annual commitment fee of 0.5% of the unused balance of the loan commitment.On the used portion of the revolver, it paid 1.5% above prime for the funds actually borrowed on a simple interest basis.The prime rate was 3.25% during the year.If the firm borrowed $6,000,000 immediately after the agreement was signed and repaid the loan at the end of one year, what was the total dollar annual cost of the revolver?

• A) $285,000
• B) $300,000
• C) $315,000
• D) $330,750
• E) $347,288

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Definitions:

Cephalocaudal Development

A pattern of growth in which development proceeds from the head downwards through the body, influencing motor skills and physical maturation.

Infants

Very young children, typically under one year of age, who are in the earliest stage of human development.

Arms

Limbs attached at the shoulder on the human body, primarily used for manual tasks and movement.

Rational Consideration

Thoughtful and reasonable evaluation or contemplation of something.