What is the effective annual interest rate

Assignment Help Financial Management

Reference no: EM131549289

In exchange for a $400 million fixed commitment line of credit, your firm has agreed to do the following: Pay 1.92 percent per quarter on any funds actually borrowed. Maintain a 1 percent compensating balance on any funds actually borrowed. Pay an up-front commitment fee of 0.27 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? (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) Effective annual rate % b. Suppose your firm immediately uses $222 million of the line and pays it off in one year. What is the effective annual interest rate on this $222 million loan? (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) Effective annual rate %

Please give correct answers for both parts

Reference no: EM131549289

Questions Cloud

Trained on a new e-mail encryption mandate : Employees at ACME Corp are being trained on a new e-mail encryption mandate. Accordingly, they just learned how to encrypt their e-mail.

Identical except for their financial leverage ratios : Financial leverage effects Firms HL and LL are identical except for their financial leverage ratios and the interest rates they pay on debt.

What would the aftertax cost of debt be : what would the aftertax cost of debt be, based on their cost last year and the 10 percent increase?

Provide a quick visualization of the descriptive statistics : From a statistical point of view, J. Park and Park (2016) reveal a population is all "persons, objects, institutions, or other entities" that can facilitate.

What is the effective annual interest rate : What is the effective annual interest rate on this $222 million loan? what is the effective annual interest rate on this line of credit?

What is the difference between gdp and real gdp : What's the difference between GDP and Real GDP? When a person buys a new home, why does it not fit into the Persona/ Consumption Expenditures category?

Computer system life cycle process : What is the role of the CSPM in the initiation phase of the Computer System Life Cycle process?

How does global sourcing and procurement impact : How do sales and operations planning in supply chain integration impact the company overall - How does global sourcing and procurement impact

Pseudocode for iterative algorithms : Give pseudocode for iterative algorithms for the following problems:

User Account

All Pages