1) Assume Markit Corp. wants to raise short term funds by issuing commercial papers. It has two options: A) issue a six-month commercial paper in the US at a discount interest rate of 4%, B) issue a Eurodollar commercial paper for six months at interest rate of 4.2%.

a) Which alternative is better if the face value of the CP is $100 million?

b) Assume Markit can get standby letter of credit from Wells Fargo Bank to support its commercial paper for a fee of $50,000. In that case it can issue the CP in the US at 3.8%. It getting the letter of credit worth it?

2) Assume a company issued a $100 million floating rate note of 5 years maturity that pays coupon semiannually based on 6-month LIBOR + 150 basis points. The 6-month LIBOR rates on select coupon payment dates are given below. Calculate the expected amount of coupon payments on those dates starting on 12/31/17.

DATE	6/30/17	12/31/17	6/30/18	12/31/18	6/30/19	12/31/19
LIBOR %	2	2.5	3	1.8	2.4	3.6