Multiple Choice
A firm has a $5 million revolving credit agreement with its bank at 1.5% over prime with a commitment fee of .5% unborrowed balance. What is the total cost of borrowing in a month when the prime rate is 8% if the firm borrowed $2 million prior to the beginning of the month and takes down an additional $1 million two thirds through the month on the 21st? (Correct answers may differ due to rounding.)
A) $21,875
B) $20,833
C) $20,417
D) $19,583
Correct Answer:
Verified
Correct Answer:
Verified
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