The UR Bloom Corporation Established a Line of Credit with a a Local

question 138

Essay

The U.R. Bloom Corporation established a line of credit with a local bank. The maximum amount that can be borrowed under the terms of the agreement is $125,000 at a rate of 5%. A compensating balance averaging 10% of the loan is required. If the firm needs $100,000 for six months, what is the dollar cost of the loan and the annual percentage rate (APR)?

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Definitions:

Real Estate Commissions

Fees paid to real estate agents for services in facilitating the buying or selling of real estate properties, usually a percentage of the sale price.

Closing Costs

Fees and expenses, excluding the purchase price, that are incurred during the process of transferring property ownership.

Accrued Property Taxes

Property taxes that have been incurred but not yet paid, recorded as a liability on the balance sheet.

Parking Lots

Designated areas where vehicles can be parked, often found near businesses, public spaces, or commercial buildings.