Question: Calculate the effective annual cost of a one year 2 million operating
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.
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