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Botany Bay Corporation of Australia seeks to borrow US $50,000,000 in the Eurodollar market. Funding is needed for two years. Investigation leads to three possibilities.
Botany Bay Corporation of Australia seeks to borrow US $50,000,000 in the Eurodollar market. Funding is needed for two years. Investigation leads to three possibilities. Compare the alternatives and make a recommendation. \#1. Botany Bay could borrow the US $50,000,000 for two years at a fixed 5% rate of interest \#2. Botany Bay could borrow the US $50,000,000 at LIBOR which is currently 4%, and the rate would be reset every six months \#3. Botany Bay could borrow the US $50,000,000 for one year only at 5%. At the end of the first year Botany Bay would have to negotiate for a new one-year loan
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