A Firm Has a Committed Line of Credit with a Maximum

question 27

Multiple Choice

A firm has a committed line of credit with a maximum of $10 million and an interest rate of 8.5% (EAR) with a certain bank. The commitment fee is 0.5% (EAR) . The firm borrows $2 million 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) $520,000
• B) $680,000
• C) $210,000
• D) $720,000

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Definitions:

Tailoring The Regimen

Adjusting or customizing a treatment plan or health routine to fit the specific needs or preferences of an individual.

Text Messages

Written messages sent electronically, typically through mobile phones.

Medication

Drugs or other substances used to treat, prevent, or diagnose illness and improve health.

Financial Assistance

Monetary support provided to individuals or organizations, often aimed at alleviating poverty or facilitating access to services.