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Should barow pay the bank

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QUESTION 1 - Today is July 1 and Barow Company will need a fixed interest rate loan of P1,200,000 for 6 months starting on October 1. The bank quotes an FRA rate of 8% for the loan. If the actual rate on October 1 is 10%, how much interest in pesos, should Barow pay the bank (actual cash outflow)?

QUESTION 2 - Garantea Company enters into an IRG arrangement with Metrobank for a 9 months, P800,000 loan starting 3 months from now.  The IRG rate is at 11% and the bank quotes a premium of P4,000. Compute the effective interest rate if the actual interest rate 3 months from now is 8%?

Reference no: EM132944253

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