Question
1. Please compute the Net Interest Income on ABC Corp. assuming the Cost of Funds is Prime rate plus 50bps. (I need to find out
1. Please compute the Net Interest Income on ABC Corp. assuming the Cost of Funds is Prime rate plus 50bps.
(I need to find out the exact net interest income on ABC Corp assuming the Cost of Funds is Prime rate plus 50bps. Please explain your solution and how you got the numbers )
Information:
The bank has granted ABC Corp. a revolving credit and SBLC facility with the following terms:
RCF Facility: US$2,000,000.00
RCF Spread/interest: 1.75% per annum over prime rate
Commitment Fee: 0.50% per annum on the undrawn portion
SBLC Facility: US$1,000,000.00
SBLC Fee: 1/8% per annum on the drawn portion
Facility balance and interest rate movements in Jan 2018:
ABC Corp. has a drawdown against its RCF Facility of US$1,500,000 on Jan 1, 2019 and $250,000 on Jan 26, 2019.
Prime rate changed from 3.5% to 3.75% on Jan 22, 2019. An SBLC was issued on Jan 2, 2019 for US$250,000.00.
Cost of Funds Rate:
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