Maurice Tutor

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About Maurice Tutor

Levels Tought:
Elementary,Middle School,High School,College,University,PHD

Expertise:
Algebra,Applied Sciences See all
Algebra,Applied Sciences,Biology,Calculus,Chemistry,Economics,English,Essay writing,Geography,Geology,Health & Medical,Physics,Science Hide all
Teaching Since: May 2017
Last Sign in: 401 Weeks Ago, 1 Day Ago
Questions Answered: 66690
Tutorials Posted: 66688

Education

  • MCS,PHD
    Argosy University/ Phoniex University/
    Nov-2005 - Oct-2011

Experience

  • Professor
    Phoniex University
    Oct-2001 - Nov-2016

Category > Accounting Posted 17 Aug 2017 My Price 9.00

Costs of Borrowing

Problem 16-17 Costs of Borrowing [LO3]

In exchange for a $400 million fixed commitment line of credit, your firm has agreed to do the following:
 
1. Pay 1.95 percent per quarter on any funds actually borrowed.
2. Maintain a 4 percent compensating balance on any funds actually borrowed.
3. Pay an up-front commitment fee of 0.3 percent of the amount of the line.
Required:
Based on this information, answer the following:
 
(a)

Ignoring the commitment fee, what is the effective annual interest rate on this line of credit? (Do not round intermediate calculations. Enter your answer as a percentage rounded to 2 decimal places (e.g., 32.16).)
  Effective annual rate %
(b)

Suppose your firm immediately uses $225 million of the line and pays it off in one year. What is the effective annual interest rate on this $225 million loan? (Do not round intermediate calculations. Enter your answer as a percentage rounded to 2 decimal places (e.g., 32.16).)
   
  Effective annual rate %

 

Answers

Maurice Tutor
(5)
Status NEW Posted 17 Aug 2017 09:08 PM My Price 9.00

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