Question
Petrol Ibrico. Petrol Ibrico, a European gas company, is borrowing $750,000,000 via a syndicated eurocredit for six years at 110 basis points over LIBOR. LIBOR
Petrol Ibrico.Petrol Ibrico, a European gas company, is borrowing
$750,000,000
via a syndicated eurocredit for six years at
110
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
1.1%
of the principal amount. What is the effective interest cost for the first year if the annual LIBOR is
4.30%
during the first six months and
4.60%
during the second six months.
Question content area bottom
Part 1
The effective interest cost for the first year is
enter your response here%.
(Round to two decimal places.)
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