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In exchange for a $410 million fixed commitment line of credit, your firm has agreed to do the following:



1.
Pay 2.4 percent per quarter on any funds actually borrowed.

2.
Maintain a 4 percent compensating balance on any funds actually borrowed.

3.
Pay an up-front commitment fee of .11 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.)

b. Suppose your firm immediately uses $180 million of the line and pays it off in one year. What is the effective annual interest rate on this $180 million loan? (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.)

Sagot :

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