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What was the total peso cost of the loan agreement

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Question - KAN Corporation arranged a revolving credit agreement amounting to P10,000,000 with a group of small banks. The firm paid an annual commitment fee of ½% of the unused balance of the loan commitment. On the used portion of the loan, KAN paid 1.5% above prime for the funds actually borrowed on an annual simple interest basis. The prime rate was at 9% for the year.

Required -

1. IF KAN Corp. borrowed P10,000,0000 immediately after the agreement was signed and repaid the loan at the end of one year, what was the total peso cost of the loan agreement for one year?

2. If KAN Corp. does not borrow at all, what was the total peso cost of the loan agreement for one year? 3. If KAN Corp. borrowed P6,000,000 immediately after the agreement was signed and repaid the loan at the end of one year, what was the total peso cost of the loan agreement for one year?

Reference no: EM133133410

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