Calculate and also repayment amount including interest

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On 15 April, Company A determines that it will borrow $50 million on 20 August. The loan will be repaid 180 days later on 16 February, and the rate will be at LIBOR plus 200 basis points. Because Company A believes that interest rates will increase, it decides to manage this risk by going long an FRA. An FRA will enable it to receive the difference between LIBOR on 20 August and the FRA rate quoted by the dealer on 15 April. The quoted rate from the dealer is 3.00 percent. Company A wants to lock in a 5.00 percent rate: 3.00 percent plus 200 basis points.

Can you please use the FRA payoff formula to calculate and also repayment amount including interest

Reference no: EM132395305

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