What fixed rate of interest does company borrow

Assignment Help Financial Management
Reference no: EM131990109

This question is a slight variation of the above problem. It's the same set-up as before, but now we have an intermediary who charges a 0.3% intermediation fee. Companies A and B have been offered the following rates per annum on a $20M five-year loan. Company A requires a floating-rate loan. Company B requires a fixed rate loan. Design a swap that will appear equally attractive to both parties (split any gains from the swap right down the middle). Remember that the intermediary will take a 0.3% intermediation fee. Fixed Rate Floating Rate Company A 4.7% LIBOR + 0.3% Company B 7.1% LIBOR + 0.8% After the swap you designed, at what fixed rate of interest does Company B borrow?

Reference no: EM131990109

Questions Cloud

Sell for immediately after firm pays dividend in one year : What price must you expect Evco stock to sell for immediately after the firm pays the dividend in one year to justify its current? price?
What is the value of the swap to the party paying floating : A $100,000 interest rate swap has a remaining life of 10 months. What is the value of the swap to the party paying floating?
Which bank has the most competitive bid price : Which bank has the most competitive ask price? Which bank has the most competitive bid price?
Conducts the customer segment research option : B&B has a new baby powder ready to market. What is the NPV if it conducts the customer segment research option ?
What fixed rate of interest does company borrow : After the swap you designed, at what fixed rate of interest does Company B borrow?
Insurance company and have sold annuity to customer : You are an insurance company and have sold an annuity to a customer. How much does it have to invest today to just cover the cost of the annuity?
What would be the case for the preffered stock : But what would be the case for the preffered stock?
Ensure all foreign exchange risk is assumed by the bank : Make the swap equally attractive to both sides and ensure all foreign exchange risk is assumed by the bank.
Discussing performance measures : Since we're discussing performance measures this week, and since we've all experienced outsourced customer service (via a call center),

Reviews

Write a Review

Financial Management Questions & Answers

  Foreign company acquisition

Acquisition by a foreign company and the effects of that decision and the results of foreign exchange in Euro and the exchange rate differences.

  Financial management for profit and non profit organizations

In this essay, we are going to discuss the issues of financial management in a non-profit organisation.

  Method for estimating a venture''s value

Evaluate venture's present value, cash and surplus cash and basic venture capital.

  Replacement analysis

This document show the Replacement Analysis of modling machine. Is replacement give profit to company or not?

  Business finance task - capital budgeting

Your company is considering using the payback period for capital-budgeting. Discuss the advantages and disadvantages of this technique.

  Analysis of the investment

In this project, you will focus on one of these: the additional cost resulting from the purchase of an apple press (a piece of equipment required to manufacture apple juice).

  Conduct a what-if analysis

Review the readings and media for this unit, including the Anthony's Orchard case study media. Familiarise yourself with the Anthony's Orchard company and its current situation.

  Determine operational expenditures

Organisations' behaviour is guided by financial data. In the short term, such data will help determine operational expenditures; in the long term, historical data may help generate forecasts aimed at determining strategic plans. In both instances.

  Personal financial management

How much will you have left over each half year if you adopt the latter course of action?

  Sources of finance for expansion into new foreign markets

A quoted company is considering several long-term sources of finance for expansion into new foreign markets.

  Long term financial planning

This assignment is designed for analyze Long term financial planning begins with the sales forecast and the key input in the long term fincial planning.

  Explain the role of fincial manager

This assignment explain the role of fincial manager, function of manger. And what are the motives of financial manager.

Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd