Weiss Inc Arranged a $9,000,000 Revolving Credit Agreement with a Group

question 128

Multiple Choice

Weiss Inc. arranged a $9,000,000 revolving credit agreement 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:

Gerontology

The study of the biological, psychological, and social aspects of aging.

Jessica Mitford

An English author, journalist, and political campaigner, known for her investigative work and critique on the funeral industry in her book "The American Way of Death."

Funeral Industry

The sector that provides services related to the burial or cremation of the dead, including funeral homes and cemeteries.

The American Way

A term reflecting the set of values, traditions, and cultural identity perceived as characteristic of the United States.