Calculate the effective annual cost of a one-year $2-million operating line of credit. The firm borrowed $1.2 million for the first five months of the year and reduced the loan amount to $500,000 for the rest of the year. The quoted interest rate is 7.5 percent, and there is a 0.8 percent commitment fee on the unused portion.
Answer to relevant Questions1. Which of the following is true about finance?a. Finance is the study of how and under what terms savings (money) are allocated between lenders and borrowers.b. Finance is different from economics because economics does ...Multiple Choices1. Which of the following businesses is the least likely to be operated as a partnership?a. Accounting firmsb. Doctors’ officesc. Lawyers’ officesd. Steel foundry2. Which of the following statements is ...List the basic areas of financial management.1. Which of the following statements about an efficient market is false?a. It reflects all relevant and available information.b. Prices will reflect such information as firm financial strength and earnings.c. It reacts to ...What is the effective annual cost if a firm issues $10 million of 180-day BAs at a quoted rate of 6.5 percent, and the bank charges it a 0.5 percent stamping fee? Compare the effective annual cost of 180-day commercial paper ...
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