Your firm has a committed line of credit with your bank with a commitment fee of

Question

Your firm has a committed line of credit with your bank with a commitment fee of 0.5% EAR) and an interest rate of 6% (EAR) The total înes S500,000 and you borrowed S300,000 at the beginning of the year. If you repay the $300,000 at the end of the year, what is your total cost, in dollars of the interest and commitment fee? What is this cost as a percentage of the amount you borrowed? Your total cost, in dollars of the interest and commitment fee, is Round to the nearest dolar) Your total cost as a percentage of the amount you borrowed is %. (Round to two decimal place.)

Explanation / Answer

1) Commitment fee = 200000*0.5% = $         1,000 Interest = 300000*6% = $      18,000 Total cost in dollars of the interest and commitment $      19,000 2) Cost as a percentage of the amount borrowed = 19000/300000 = 6.33%

Related Questions

Navigate

• Browse (All)
• Browse Y
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.