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CTP · Question #157
CTP Question #157: Real Exam Question with Answer & Explanation
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Question
- (Topic 2) A company has negotiated a credit facility with the following terms: $5,000,000 line of credit $3,000,000 average borrowing 30 basis point commitment fee on unused portion of line Interest rate on advances is 1-month LIBOR plus 4% 1-month LIBOR is currently 2% Compensating balance requirement of 20% on the outstanding borrowings What is the effective annual borrowing rate for the line of credit?
Options
- A6.0%
- B6.2%
- C7.8%
- D9.3%
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