1. Your Company has a $20 million revolving credit agreement with its bank at 7% based on a calendar year.
Prior to the month of June it had borrowed $8 million.
On June 11, it borrowed another $4 million (assume the funds were available on June 11.
The bank's commitment fee is 0.15% annually.
What bank charges will the company incur for the month of June.
$63,388.90
$54,571
$49,245
$68,824
2. In order to get a special interest rate of 6% you enter into a discounted loan arrangement.
You borrow $1000 for at 6% for one year and pay the interest up front.
At the end of the year you Pay back the $1,000.
What is the effective rate of interest on this loan
7.65%
6.38%
8.04%
6.0%