A line of credit costs the firm only the normal interest for the period during which money is actually borrowed.

Question

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A line of credit allows a firm to borrow money as needed, and they only pay interest on the amount borrowed during the time it is actually borrowed. This can make it a cost-effective financing option compared to other types of loans where the entire amount is borrowed upfront and interest is charged on the full amount from the start.

A Line of Credit Costs the Firm Only the Normal