In exchange for a $$400$ million fixed commitment line of credit, your firm has agreed to do

the following:

Pay $1\mathrm{.}94$ percent per quarter on any funds actually borrowed.

Maintain a $2$ percent compensating balance on any funds actually borrowed.

Pay an up$-$front commitment fee of $\mathrm{.}29$ percent of the amount of the line.

Based on this information, answer the following:

a$.$ Ignoring the commitment fee, what is the effective annual interest rate on this line of

credit?

Note: Do not round intermediate calculations and enter your answer as a percent

rounded to $2$ decimal places, e$.$g$.,32\mathrm{.}16.$

b$.$ Suppose your firm immediately uses $$224$ million of the line and pays it off in one

year. What is the effective annual interest rate on this $$224$ million loan?

Note: Do not round intermediate calculations and enter your answer as a percent

rounded to $2$ decimal places, e$.$g$.,32\mathrm{.}16.$

Answer is complete but not entirely correct.