What was the total dollar annual cost of the revolver

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Holiday Inc. arranged a P9,000,000 revolving credit agreement with a group of banks. The firm paid an annual commitment fee of 0.5% of the unused balance of the loan commitment. On the used portion of the revolver, it paid 1.5% above prime for the funds actually borrowed on a simple interest basis. The prime rate was 9% during the year.

Problem 1: If the firm borrowed P6,000,000 immediately after the agreement was signed and repaid the loan at the end of one year, what was the total dollar annual cost of the revolver?

A. ?P612,750

B. ?P645,000

C. ?P677,250

D. ?P711,113

Reference no: EM132836734

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