In exchange for a $450 million fixed commitment line of credit, your firm has agreed to do the following pay 2 0 per quarter on any funds actually borrowed 2 maintain a 4 compensating balance on any funds actually borrowed pay up front commitment fee of 0 150 of the amount of line based on this inf...

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In exchange for a $450 million fixed commitment line of credit, your firm has agreed to do

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In exchange for a $450 million fixed commitment line of credit, your firm has agreed to do the following:

pay 2.0% per quarter on any funds actually borrowed
2. maintain a 4% compensating balance on any funds actually borrowed
pay up-front commitment fee of 0.150% of the amount of line

based on this information, answer the following:

a) ignoring the commitment fee, what is the effect annual interest rate on this line of credit? (Do not round intermediate calculations)

b) suppose your firm immediately uses $200 million of the line and pays it off in one year. what is the effective annual interest rate on this $200 million loan? (do not round intermediate calculations)

Posted Date: May 17, 2024 05:09 PM

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In exchange for a $450 million fixed commitment line of credit, your firm has agreed to do

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