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

---

Definitions:

Secondary Control

A coping mechanism where individuals adjust their thoughts or emotions to deal with situations beyond their control.

Secondary Control

A coping mechanism that involves adjusting one's own goals and efforts to deal with situations that are perceived as uncontrollable.

Primary Control

The effort to change the external world so that it aligns with one's personal needs, desires, or goals.

Modify Reality

The act of altering the perception or understanding of the real world, often through technology, art, or psychological means.