Storm Electronics Has Set Up a Formal Line of Credit

question 65

Multiple Choice

Storm Electronics has set up a formal line of credit of $2 million with First Kentucky Bank. The line of credit is good for up to three years. The bank will be charging them an interest rate of 6.25 percent on the loan, and in addition the firm will pay an annual fee of 60 basis points on the unused balance. The firm borrowed $1,500,000 on the first day the credit line became available. What is the firm's effective interest rate on this line of credit? Round your final percentage answer to two decimal places.

• A) 7.50%
• B) 6.45%
• C) 6.25%
• D) 7.15%

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Definitions:

Small Round Holes

Tiny circular openings, typically created through drilling or punching in a material for various purposes.

Coordinate Tolerance

The allowable deviation from the true position specified for a feature in relation to a referenced coordinate system.

Positional Tolerance

A geometric dimensioning and tolerancing (GD&T) concept that specifies the allowable variation in the position of a feature relative to its ideal position.

Tolerance Zone

The permissible limit or limits of variation in a physical dimension or property.