Sunny Way Landscaping has a formal line of credit of $500,000 with First Commerce Bank. The interest

Question:

Sunny Way Landscaping has a formal of $500,000 with First Commerce Bank. The interest rate on the loan is 6 percent, and under the agreement, Sunny Skies must pay an annual fee of 75 basis points on the unused amount. The amount currently outstanding on the loan is $325,000. What is the annual fee the company must pay on the current unused balance? What is the effective interest rate?
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...