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35. Your firm has just issued 7-year bonds with $5 million par value. The coupon rate on these bonds was set at Libor+30bp, and coupon
35. Your firm has just issued 7-year bonds with $5 million par value. The coupon rate on these bonds was set at Libor+30bp, and coupon interest payments will be made annually. The investment banking and other fees amounted to 2% of the par value. You have also simultaneously entered a 7-year swap agreement in which you agreed to pay 5.5% and receive Libor+20bp. The swap payments are made annually. The notional amount on this swap is $5 million. The risk free rate on comparable maturity bonds is 4.5%. What is your net "all-in" interest cost of the funds you received (considering the combined bond/swap transaction)? (counts as three)
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