Question
Question 1 Rankine Corporation could borrow the USD30 million in the Eurodollar market. Funding is needed for two years. Investigation leads to three possibilities: ?
Question 1
Rankine Corporation could borrow the USD30 million in the Eurodollar market. Funding is needed for two years. Investigation leads to three possibilities: ?
-Rankine Corporation could borrow the USD30 million for two years at a fixed 5% rate of interest. ?
-Rankine Corporation could borrow the USD30 million at LIBOR +1.5%. LIBOR currently 3.5% and the rate would be reset every six months ?
-Rankine Corporation could borrow the USD30 million for one year only at 4.5%. At the end of the first year Rankine corporation would have to negotiate for a new one-year loan.
Compare the alternatives and make a recommendation.
Question 2
Refer to image attached to see question 2
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