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Business, 26.12.2020 04:00 graciemonceret6213

As treasurer of your firm, you wish to establish a credit line facility to cover an expected average annual borrowing of $10 million. Bank of the West proposes a nominal rate of 6 percent on a credit line of $30 million, a commitment fee of 25 basis points on the unused portion of the credit line and a 35 percent compensating balance on the amount borrowed. What is the effective cost of borrowing? a. 10%
b. 9.62%
c. 16.92%
d. 13.08%

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