A company receives a 5-year $100 million loan commitment from Wells Fargo at a fixed rate of 4.5%. The up-front commitment fee is 40 basis points and the unused portion of the loan is charged 15 basis points. The bank borrows a total of $45 million at the beginning of the year and none thereafter. The following is true, except: A The interest paid on the drawdown amount for the full year is $2,025,000. B The interest rate paid on the drawdown amount for the full year is 4.90% C The fee for the loan commitment for the full year is $400,000. D The fee for the unused portion of the loan commitment for the full year is $82,500

A company receives a 5-year $100 million loan commitment from Wells Fargo at a fixed rate of 4.5%. The up-front commitment fee is 40 basis points and the unused portion of the loan is charged 15 basis points. The bank borrows a total of $45 million at the beginning of the year and none thereafter. The following is true, except: A The interest paid on the drawdown amount for the full year is $2,025,000. B The interest rate paid on the drawdown amount for the full year is 4.90% C The fee for the loan commitment for the full year is $400,000. D The fee for the unused portion of the loan commitment for the full year is $82,500

EBK CONTEMPORARY FINANCIAL MANAGEMENT

14th Edition

ISBN:9781337514835

Author:MOYER

Publisher:MOYER

Chapter19: Lease And Intermediate-term Financing

Section: Chapter Questions

Problem 17P

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bartleby, a Learneo, Inc. business

	A	The interest paid on the drawdown amount for the full year is $2,025,000.
	B	The interest rate paid on the drawdown amount for the full year is 4.90%
	C	The fee for the loan commitment for the full year is $400,000.
	D	The fee for the unused portion of the loan commitment for the full year is $82,500