The chapter notes that firms commonly pay commitment fees to banks when obtaining a line of credit.

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The chapter notes that firms commonly pay commitment fees to banks when obtaining a line of credit. Yet when the line is first taken out, it commonly is not drawn down (i.e., the firm does not initiate any borrowing from its line). Why do these firms pay for something that seems to be not currently needed?
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Fundamentals of Corporate Finance

ISBN: 978-0078034640

7th edition

Authors: Richard Brealey, Stewart Myers, Alan Marcus

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