Katie's Karate Dojo Has a Commited Line of Credit with a Maximum

question 53

Multiple Choice

Katie's Karate Dojo has a commited line of credit with a maximum of $350,000 and interest rate of 6% (EAR) .The loan has a commitment fee of 0.5% (EAR) .If the firm borrows $300,000 at the start of the year and repays it at the end of the year,what is the total cost of the loan?

• A) $18,000
• B) $18,250
• C) $19,500
• D) $21,250
• E) $21,000