Bandolier Bicycles Has a Committed Line of Credit with a Maximum

question 65

Multiple Choice

Bandolier Bicycles has a committed 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

Calculate economic profit and distinguish it from accounting profit.

Identify the components of total revenue and total cost to determine profit.

Understand opportunity costs and how they influence business decisions.

Identify the normal rate of return and its importance in economic profit calculations.

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Definitions:

Mass Media

Forms of communication designed to reach large audiences through various mediums like television, radio, newspapers, and the internet.

Social Control

Mechanisms, strategies, and institutions used by society to regulate individual behavior and maintain social order.

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Law enforcement officers tasked with maintaining public order, preventing and investigating crimes.

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Individuals who have committed crimes, which are acts that violate the laws set forth by a legal system.