Bandolier Bicycles Has a Commited Line of Credit with a Maximum

question 98

Multiple Choice

Bandolier Bicycles has a commited line of credit with a maximum of $450,000 and interest rate of 4% (EAR) .The loan has a commitment fee of 0.3% (EAR) .If the firm borrows $375,000 at the start of the year and repays it at the end of the year,what is the total cost of the loan?

• A) $15,225
• B) $15,000
• C) $18,225
• D) $18,000
• E) $16,125

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