Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
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Question
Transcribed Image Text:Petrol Ibérico, Petrol Ibérico, a European gas company, is borrowing $700,000,000 via a syndicated eurocredit for six years 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 1.6% of the principal amount. What is the effective interest cost for the
first year if the annual LIBOR is 4 40% during the first six months and 4.80% during the second six months
The effective interest cost for the first year is (Round to two decimal places)
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