Pay in interest over first year of its eurodollar loan, Financial Management

Assignment Help:

A company borrows $1,500,000 at LIBOR plus a lending margin of 1.25 percent per year on a six-month rollover basis from a London bank.  If six-month LIBOR is 4 ½ % over the first six-month interval and 5 3/8 % over the second six-month interval, how much will a company pay in interest over the first year of its Eurodollar loan?

Solution:  $1,500,000 x (.045 + .0125)/2 + $1,500,000 x (.05375 + .0125)/2

         = $43,125 + $49,687.50 = $92,812.50.


Related Discussions:- Pay in interest over first year of its eurodollar loan

Long-term debt finance, The approaches that Blin could accept regarding the...

The approaches that Blin could accept regarding the relative proportions of long- and short-term finance to meet its working capital needs have been described as moderate, conserva

Design, D esign, Drawing and Bill of Quantities (BOQ) for works We dis...

D esign, Drawing and Bill of Quantities (BOQ) for works We discussed about INCO terms which are set standards for the project. Now let us learn about other parameters for cont

Long-term debt, Long- T er m Debt Long-term debt is a deb...

Long- T er m Debt Long-term debt is a debt obligation that has a maturity from the date the obligation was incurred of more than one year. The debt obligation com

Explain gresham’s law, Explain Gresham’s Law. Answer:  Gresham’s law cons...

Explain Gresham’s Law. Answer:  Gresham’s law considers to the phenomenon that bad (abundant) money drives good (scarce) money out of circulation. This type of phenomenon was fre

Factors considered in assigning a credit rating, Credit rating agenci...

Credit rating agencies carry out credit rating. Companies appoint these agencies to assign credit rating for their corporate issues. The rating agencies may condu

Written report on company, I have a assignment of financial accounting It...

I have a assignment of financial accounting Its a report on company Assignment length 2000 words

Explain the financial desirability of burley plc, BURLEY PLC Financial...

BURLEY PLC Financial desirability In a real-terms analysis the real rate of return necessary by shareholders has to be used. This is found as follows 1 nominal rate/1 i

Strategic management, Develop and implement strategic plan using bounce fit...

Develop and implement strategic plan using bounce fitness as case study

Cash budget, stauffer , inc., has estimated sale and purchase requirments f...

stauffer , inc., has estimated sale and purchase requirments for the last half of coming year. parepare cash budget for the month of

Perpetual-floating rate bonds-index and linked bonds, Explain the following...

Explain the following term: Perpetual bonds, Floating rate bonds, Index-linked bonds and Callable bonds. Perpetual bonds (also termed as consols) are never mature. This

Write Your Message!

Captcha
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