You have established a $150 million credit line with a bank on July 1. Terms are 5% for any amount borrowed and a half percent for the amount of the line undrawn. All payments are made at the end of each quarter. Suppose you borrow $10 million at the outset and another $50 million October 1. What will your payments to the bank be at the end of the year (ignore day-counts)?
a) 0.05 x 50,000,000 + 0.005 x 100,000,000
b) (0.05 x 50,000,000 + 0.005 x 100,000,000) / 4
c) 0.05 x 60,000,000 + 0.005 x 90,000,000
d) 0.055 x 60,000,000 + 0.005 x 90,000,000
e) (0.05 x 60,000,000 + 0.005 x 90,000,000) / 4
f) (0.05 x 50,000,000 + 0.005 x 100,000,000) / 4
Answer: e) (0.05 x 60,000,000 + 0.005 x 90,000,000) / 4
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