A Firm Has a Committed Line of Credit with a Maximum

question 87

Multiple Choice

A firm has a committed line of credit with a maximum of $1.2 million and an interest rate of 12% (EAR) with a certain bank. The commitment fee is 0.6% (EAR) . The firm borrows $500,000 at the start of the year and then repays it at the end of the year. What is the total cost of the loan?

• A) $60,000
• B) $64,200
• C) $76,300
• D) $95,000

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Definitions:

Order

The command, direction, or sequence according to which activities, operations, or events are conducted, maintained, or arranged.

Liberty

A fundamental principle denoting the individual's right to freedom, especially from oppressive restrictions imposed by authority on one's way of life, behavior, or political views.

Equal Treatment

The principle that all individuals must be treated with the same respect and fairness, especially under the law, without discrimination.

Concept of Liberty

A political philosophy principle that emphasizes individual freedom and the right to live one’s life without undue government interference.