Ahab's Army Surplus Has a Commited Line of Credit with a Maximum

question 47

Multiple Choice

Ahab's Army Surplus has a commited line of credit with a maximum of $1.2 million and interest rate of 3.5% (EAR) .The loan has a commitment fee of 0.45% (EAR) .If the firm borrows $900,000 at the start of the year and repays it at the end of the year,what is the total cost of the loan?

• A) $42,000
• B) $35,550
• C) $43,350
• D) $32,850
• E) $31,500

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