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:

Contingent Workers

Workers who are hired on a temporary basis or on a contract that differs from a permanent employment, often without the same level of job security or benefits.

Antiunionization Strategies

Techniques employed by some employers to prevent or minimize union presence and influence within their organization.

Wildcat Strike

An unauthorized work stoppage initiated by workers without the consent or approval of their union's leadership.

Positive Settlement Zone

A range within negotiation where the interests of all parties overlap, making agreement possible.