Formal line of credit, Winegartner Cosmetics is setting up a line of credit at its bank, Finance Basics

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Formal line of credit

Winegartner Cosmetics is setting up a line of credit at its bank for $5 million for up to two years. The interest rate is 5.875 percent and the loan agreement calls for an annual fee of 40 basis points on any unused balance for the year. If the firm borrows $2 million on the day the loan agreement is signed, what is the firm's effective rate?

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Finance Basics: Formal line of credit

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Finance Basics: Formal line of credit

Reference No:- TGS044202

Have a Question? (oR Write a Review)

Recent Questions Asked Finance Basics

Q : Risk and expected return relationships

Q : Procedures for mitigating the threats

Q : Net after-tax cash flows amounted

Q : Computing effective interest rate on loan

Q : Formal line of credit

Q : After-tax cash inflow from the sale of the machinery

Q : Current value of share of common stock

Q : Reporting purposes and tax purposes

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Request for Solution File

Ask an Expert for Answer!!

Finance Basics: Formal line of credit

Reference No:- TGS044202

Recent Questions Asked Finance Basics

Q : Risk and expected return relationships

Q : Procedures for mitigating the threats

Q : Net after-tax cash flows amounted

Q : Computing effective interest rate on loan

Q : Formal line of credit

Q : After-tax cash inflow from the sale of the machinery

Q : Current value of share of common stock

Q : Reporting purposes and tax purposes

Q : Overall financial decision making

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