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You are the CFO of a publicly traded corporation, and as a part of your responsibilities you arrange loans for various short term and long
You are the CFO of a publicly traded corporation, and as a part of your responsibilities you arrange loans for various short term and long term funding requirements. The investment bank who provides those loans has submitted to you a list of terms.
The CEO is also considering building a new factory, and he has asked you to inquire about the rate on a $36,000,000 loan for 30 years. The bank has informed you that for $36,000,000 now, your firm would need to repay the $32,000,000 at the end of 30 years, but also make an annual interest payment of $1,800,000 each year. What is the interest rate?
Sketch a graph of the yield curve which your company faces for their costs of borrowing.
Based on your previous answer, do you think that now is a good time to build a new factory? Why?
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