2. Citibank offers to syndicate a Eurodollar credit for the government of Poland with the following terms:

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2. Citibank offers to syndicate a Eurodollar credit for the government of Poland with the following terms:

Principal US$1 billion Maturity 7 years Interest rate LIBOR + 1.5%, reset every six months Syndication fee 1.75%

(a) What are the net proceeds to Poland from this syndicated loan?

(b) Assuming that six-month LIBOR is currently at 6.35%, what is the effective annual interest cost to Poland for the first six months of this loan?

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International Financial Management

ISBN: 9781118929322

10th Edition

Authors: Alan C. Shapiro, Peter Moles

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