Certain or Uncertain

Botany Bay Corporation. Botany Bay Corporation of Australia seeks to borrow US$30,000,000 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 USS30,000,000 for two years at a fixed 4% rate of interest. 2. Botany Bay could borrow the USS30,000,000 at LIBOR 1.500%. LIBOR is currently 3.500%, and the rate would be reset every six months. 3. Botany Bay could borrow the USS30,000,000 for one year only at 4.500%. At the end of the first year Botany Bay would have to negotiate for a new one-year loan 1. Botany Bay could borrow the USS30,000,000 for two years at a fixed 4% rate of interest. For Alternative 1, the interest cost per year is S for the first year and S for the second year. (Round to the nearest dolla For Alternative 1, the certainty over access to capital is for the first 6 months Y for the second 6 months, Y for the third 6 months, and Y for the fourth 6 months. (Select from the drop-down menus.) for the second 6 months For Alternative 1, the certainty over the cost of capital is V for the first 6 months V for the third 6 months, and Y for the fourth 6 months. (Select from the drop-down menus.) 2. Botany Bay could borrow the USS30,000,000 at LIBOR +1.500%. LIBOR is currently 3.500%, and the rate would be reset every six months. For Alternative 2, the interest cost for the first six months is Round to the nearest dollar. For Alternative 2, the certainty over access to capital is V for the first 6 months Y for the second 6 months, v for he third 6 months, and Y for the fourth 6 months. (Select from the drop-down menus.) For Alternative 2, the certainty over the cost of capital is for the first 6 months. for the second 6 months, for the third 6 months, and Y for the fourth 6 months. (Select