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. | $5,000 | |
| C. | -$10,000 | |
| D. | $12,000 |
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started
Technical Analysis Of Stock Trends
Authors: Robert D. Edwards, John Magee, W.H.C. Bassetti
9th Edition
0814408648, 978-0814408643
