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Tea Company (TC)wants to borrow US $100 million for 5 years. Investment banks propose to either do a syndicated Eurocredit or issue a Eurobond. The
Tea Company (TC)wants to borrow US $100 million for 5 years. Investment banks propose to either do a syndicated Eurocredit or issue a Eurobond. The Eurocredit would be denominated in dollars, but the Eurobond would be denominated in different currencies for different markets (these issues are called tranches): a. What are the net proceeds in USD for TC for the Eurocredit loan? (3 marks) b. Assuming that the 6 -month LIBOR in USD is currently at 2.00%, what is the effective annual interest cost for TC for the first 6 months of the loan? (2 marks)
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