Determine the effective annual interest rate on an $85,000 line of credit with an annual percentage rate

Question:

Determine the effective annual interest rate on an $85,000 with an annual percentage rate of 9.25% compounded monthly. The bank requires that a 2% commitment fee be paid on the unused balance of the The average daily balance is anticipated to be $70,000.

Line of Credit
A line of credit (LOC) is a preset borrowing limit that can be used at any time. The borrower can take money out as needed until the limit is reached, and as money is repaid, it can be borrowed again in the case of an open line of credit. A LOC is...