The Finance Experts Company is being offered a one-year $1 million operating line of credit at a rate of 5.75%.There is a monthly 0.5% commitment fee on the unused amount.The firm borrows only $800,000 during the first 6 months of the loan and reduces its loan by a further $300,000 for the remaining 6 months. What is the effective annual cost (in percent) of this loan arrangement?

Answer rating: 100% (QA)

To calculate the effective annual cost of the loan arrangement you need to consider both the interes... View the full answer