A firm has a $5 million revolving credit agreement with its bank at 1.5% over prime with a commitment fee of .5% unborrowed balance. What is the total cost of borrowing in a month when the prime rate is 8% if the firm borrowed $2 million prior to the beginning of the month and takes down an additional $1 million two thirds through the month on the 21 st? (Correct answers may differ due to rounding.)
a.
$20,833
b.
$19,583
c.
$21,875
d.
$20,417