The lower effective interest cost. Introduction: LIBOR : It stands for London Inter-Bank Offered Rate and is used as the benchmark by global banks for the purpose of short-term loans. Prime Rate : Also called prime interest rate, it is the prime lending rate to be charged by commercial banks from creditworthy customers.

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Chapter 8, Problem 8P

Summary Introduction

To determine: The lower effective interest cost.

Introduction:

LIBOR:

It stands for London Inter-Bank Offered Rate and is used as the benchmark by global banks for the purpose of short-term loans.

Prime Rate:

Also called prime interest rate, it is the prime lending rate to be charged by commercial banks from creditworthy customers.

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