What is the loan effective interest rate

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Reference no: EM131938637

1. Crescent, Inc., management is planning an IPO, and the investment bank offers to buy the securities for $21.50 per share and offer them to the public at $23.00. What is the gross underwriter’s spread? Assume that the underwriter’s cost of bringing the security to the market is $1.00 per share.

What is the net profit? (Round answer to 2 decimal places, e.g. 15.21.)

Net profit $

2. Choi Exports is setting up a line of credit at its bank for $7.5 million for up to three years. The interest rate is 7.875 percent, and the loan agreement also calls for an annual fee of 50 basis points on any unused balance for the year. If the firm borrows $5 million on the day the loan agreement is signed, what is the loan’s effective interest rate? (Round answer to 3 decimal places, e.g. 15.213.)

Effective interest rate %

Reference no: EM131938637

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