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MFB Industries borrowed $5,000,000 and agrees to make quarterly in- terest payments at the spot rate implied by the three-month zero-coupon bond price plus 30
MFB Industries borrowed $5,000,000 and agrees to make quarterly in- terest payments at the spot rate implied by the three-month zero-coupon bond price plus 30 bps. If the prices of the $100 zero-coupon bonds dur- ing the term of the loan were as in the table below, what is the amount of MFB Industry's interest payment at the end of the first year? Time in years) 0 0.25 0.5 0.75 1 Price in dollars) 99.32 99.58 | 99.45 99.20 99.79 1.25 99.84 MFB Industries borrowed $5,000,000 and agrees to make quarterly in- terest payments at the spot rate implied by the three-month zero-coupon bond price plus 30 bps. If the prices of the $100 zero-coupon bonds dur- ing the term of the loan were as in the table below, what is the amount of MFB Industry's interest payment at the end of the first year? Time in years) 0 0.25 0.5 0.75 1 Price in dollars) 99.32 99.58 | 99.45 99.20 99.79 1.25 99.84
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