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Details of an off-exchange tailor-made loan

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Reference no: EM132379977

The information below provides details of an off-exchange tailor-made loan obtained by Royal Oceania Cruises to fund their operations.

  • Today is June 30 2019, which is the initiation date of the loan.
  • The Commonwealth Bank is loaning money to Royal Oceania Cruises.
  • The amount borrowed is $50 million.
  • The maturity date of the loan is three years.
  • A minimum interest payment of $1 million is due in each financial year. The financial
  • year ends on 30 June each year.
  • The nominal interest rate associated with this loan is the Reserve Bank of Australia
  • cash rate (as at June 30 2019) plus a margin of 3.75%. This interest rate is compounded monthly and is fixed from the initiation date.

Assume the following payments are made by Royal Oceania Cruises during the term of the loan:

  • Monthly repayments of $2 million at the end of each month beginning on January 31 2020 until April 30 2021 (inclusive).
  • May 31 2021: a single payment of $2 million.
  • April 30 2022: a single payment of $10 million
  1. Your job is to determine the outstanding value of the loan on the maturity date

Reference no: EM132379977

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