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| Burke Industries has a revolving credit arrangement with its bank which specifies that Burke can borrow up to $5 million at an annual interest rate of 9% payable monthly. In addition, Burke must pay a commitment fee of 0.25% per month on the unused portion of the line, payable monthly. Burke expects to have a $2 million cash balance and no borrowings against this line of credit on April 1, net cash inflows of $2 million in April, net outflows of $7 million in May, and net inflows of $4 million in June. If all cash flows occur at the end of the month, approximately how much will Burke pay to the bank during the second quarter related to this revolving credit arrangement? A. $62,500. B. $52,625. C. $47,700. D. $60,200. |