Calculate the interest rate for a revolving credit facility in 2014 given the following information.

Details:

Pricing spread: 350 bps

Question

Calculate the interest rate for a revolving credit facility in 2014 given the following information. Details: Pricing spread: 350 bps A)7.85% B)4.35% C)0.85% D)3.5%

Quizplus · Accepted Answer

To calculate the interest rate for a revolving credit facility, we need to add the pricing spread to a benchmark rate. In this case, we are not given a specific benchmark rate, so we will assume it is the prime rate, which was around 3.25% in 2014.

Adding the pricing spread of 350 bps (or 3.5%) to the prime rate of 3.25%, we get:

3.25% + 3.5% = 6.75%

Therefore, the closest choice to this answer is A) 7.85%.

Calculate the Interest Rate for a Revolving Credit Facility in 2014