Q.1: A Thai firm needs exactly $200 million today to pay for equipment. The firm wants to borrow the money for 6 months. There are 2 available options, namely, Eurodollar Commercial Paper (ECP) vs. Eurodollar bank loan. The firm could sell 6-month ECP at a discount rate of 2.60% pa. and the upfront fee of 1.00% on the ECPs face value. Alternatively, it could borrow Eurodollar loan at 2.80% pa. interest rate, while the loan typically carries an upfront fee of 0.80% on the loan principal. All interest rates are quoted in annual percentage rate. Show your calculation and keep at least 6 decimal points (i.e., 0.054812 or 5.4812%) in the calculation. 1.1. To meet the funding requirement, what is the appropriate (total) face value of the ECP? And What is the appropriate principal of the Eurodollar bank loan?

1.2. What is the effective borrowing cost for each alternative (show the results in both % per 6 month and % pa.)?