Internal rate of return, York is taking out a $10,000,000

Internal rate of return

Assignment Help Accounting Basics

Reference no: EM131017979

York is taking out a $10,000,000 two-year loan at a variable rate of LIBOR plus 1.50%. The LIBOR rate will be reset each year at an agreed upon date. The current LIBOR rate is 4.00% per year. The loan has an upfront fee of 1.00%

a) What is the all-in-cost (i.e., the internal rate of return) of the York loan including the LIBOR rate, fixed spread and upfront fee?

b) What portion of the cost of the loan is at risk of changing?

c) If the LIBOR rate jumps to 5.00% after the first year what will be the all-in-cost (i.e. the internal rate of return) for York for the entire loan?

d) If the LIBOR rate falls to 3.00% after the first year what will be the all-in-cost (i.e. the internal rate of return) for York for the entire loan

Reference no: EM131017979

Questions Cloud

Burmese rabbit hound with the money : Yolanda invests her $5,000 bonus into a high yield account that earns 6.7% simple interest. She wants to buy a Burmese Rabbit Hound with the money. The breeder told her that a puppy would cost $5,500.

Insider trading by shareholders of a public corporation : Insider trading by shareholders of a public corporation is monitored with respect to directors, officers, and large shareholders, and improper trading can be determined from their required filings with provincial securities regulators. Trading based ..

Discuss whether the policy improved the capability : The following preliminary Portfolio Project deliverables are due throughout the course. See each week's assignment page for more details and the final Portfolio Project rubric in the Course Information section for more details.

Pop superstar whitney houston is facing court action : Pop superstar Whitney Houston is facing court action brought by her father's entertainment company for breach of contract. The suit alleges that the singer was facing financial difficulties and drug charges until her father's company intervened on he..

Internal rate of return : York is taking out a $10,000,000 two-year loan at a variable rate of LIBOR plus 1.50%. The LIBOR rate will be reset each year at an agreed upon date. The current LIBOR rate is 4.00% per year. The loan has an upfront fee of 1.00% a) What is the all..

Firm required rate of return : Zacher Co.'s stock has a beta of 0.72, the risk-free rate is 4.25%, and the market risk premium is 5.50%. What is the firm's required rate of return?

Explain the impact that the merger is expected : You should explain the impact that the merger is expected to have on these companies. For e for example, will jobs be cut or outsourced when the merger concludes?

What are the requirements of a corporation : What are the requirements of a corporation and how do you form one? Post must be 200 words with references.

Problem regarding the company annual sales : Zucha Corporation has an inventory period of 55 days, an accounts receivable (A/R) period of 6 days, and an accounts payable (A/P) period of 3 days. The company's annual sales is $182,795.

User Account

All Pages