Petrol Ibrico, a European gas company, is borrowing

$750,000,000

via a syndicated eurocredit for six years at

70 basis points over LIBOR. LIBOR for the loan will be reset every six months. The funds will be provided by a syndicate of eight leading investment bankers, which will charge up-front fees totaling

1.41 %

of the principal amount. What is the effective interest cost for the first year if the annual LIBOR is

3.80 %

during the first six months and

4.00 %

during the second six months.

The effective interest cost for the first year is???.

(Round to two decimal places.)

wil charge up trontes totalng 1 4% of the pnncipal amount. Whatis te ettectve interest cost Tor the tret yearn the annual LIBOK1s 3 80% cunng the hrst so: months and 4 OU% during the second soc months The cffoctrvc intorest cost tor the first yoar is % (Round to two cooral places )