Question
HP and GE decide to swap their loans based on $2 million notional principal. HP currently pays 4.5% fixed on a loan and GE pays
HP and GE decide to swap their loans based on $2 million notional principal. HP currently pays 4.5% fixed on a loan and GE pays LIBOR + 0.6% on a floating rate loan when LIBOR was 3.8%.
What is the net cash flow for HP if they swap their fixed rate loan for a floating rate LIBOR + 0.6% loan from GE and LIBOR rises to 4.2%?
A.-$6,000
B.-$10,000
C.$5,000
D.$12,000
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Valuation Measuring and managing the values of companies
Authors: Mckinsey, Tim Koller, Marc Goedhart, David Wessel
5th edition
978-0470424650, 9780470889930, 470424656, 470889934, 978-047042470
