The effective interest cost for first year

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Petrol llbrico, a European gas company, is borrowing $750,000,000 via a syndicated ourocredit for six yours at 80 basis points over LIBOR. LIBOR for the loan will be reset every six months. The funds will be provided by a syndicate of eight leading investment bankers, which will charge up-front fees totaling 1.5% of the principal amount. What is the effective interest cost for the first year if the annual LIBOR is 350% during the first six months and 3.90% during the second six months.

The effective interest cost for the first year is %. (Round to two decimal places.)

Reference no: EM131558616

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