Blackhawk inc arranged a 10000000 revolving credit


Blackhawk Inc. arranged a $10,000,000 revolving credit agreement with a group of banks. The firm paid an annual commitment fee of 0.6% of the unused balance of the loan commitment. On the used portion of the revolver, it paid 0.2% above prime for the funds actually borrowed on a simple interest basis. The prime rate was 8% during the year. If the firm borrowed $9,000,000 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?

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Financial Management: Blackhawk inc arranged a 10000000 revolving credit
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