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Polaris is taking out a $5,000,000 two-year loan at a variable rate of LIBOR plus 2.00%. The LIBOR rate will be reset each year
Polaris is taking out a $5,000,000 two-year loan at a variable rate of LIBOR plus 2.00%. The LIBOR rate will be reset each year at an agreed upon date. The current LIBOR rate is 4.00% per year. The loan has an upfront fee of 2.00%. What is the all-in-cost (AIC, i.e., the internal rate of return) of the Polaris loan including the LIBOR rate, fixed spread and upfront fee?
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To calculate the allincost AIC or internal rate of return IRR of the Polaris loan we need to conside...
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Understanding Financial Accounting
Authors: Christopher D. Burnley
2nd Canadian Edition
1119406927, 978-1119406921
