What is the EAR on the loan

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Reference no: EM131859856

1) Calculate the Interest, Commitment Fees, and EAR on the following credit line:

- $500,000 credit line

- 12% interest rate

- $200,000 borrowed on average for year

- 1.0% commitment fee

2) TTDS is offered a $750,000 loan for nine months at an APR of 8%. This loan has a loan origination fee of 2%. What is the EAR on the loan?

3) TTDS is offered a $1,000,000 loan for six months at an APR of 9%. This loan requires TTDS to keep 20% of the loan principal in a non-interest-bearing account with the bank as a compensating balance. What is the EAR on the loan?

4) A firm has a $4 million credit line to borrow at the prime rate (9%). Terms require a 10% compensating balance on borrowed funds and a 0.5% commitment fee on the unused balance. Average borrowings during the year are expected to be $2 million. The firm has $100,000 on deposit at the bank. Calculate the EAR.

5) A firm issues nine-month commercial paper with a $50,000 face value and receives $45,000. What effective annual rate (EAR) is the firm paying for its funds?

Reference no: EM131859856

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