Using equation Cost loc Using equation EAR ces tot using sto

?ces tot using stoon not 2 usine Sicaafo4 mants

Solution

A) Interest cost = 400000*12%*4/12 = $ 16,000.00 Commitment fee = 500000*2.5%*8/12+100000*2.5%*4/12 = $    9,166.67 Total cost $ 25,166.67 B) Interest cost = 60000*12%*1/12 = $             600 Commitment fee = 500000*2.5%*11/12+440000*2.5%*4/12 = $       15,125 Total cost $       15,725