Question

After looking at a fixed-rate loan, Ace-Campbell Mfg. entered into a floating-rate loan agreement. This loan is set at 40 basis points (or .40 percent) over an index based on LIBOR. Ace-Campbell is concerned that the LIBOR index may go up, causing the loan to climb. That concern comes from the fact that the rate on the loan adjusts weekly based on the closing value of the LIBOR index for the previous week. Fortunately for Ace-Campbell, this loan has a maximum annual rate of 2.2 percent. It also has a minimum annual rate of 1.50 percent. Given the following information, calculate the interest rate that Ace-Campbell would pay during Weeks 2 through 10.
Date LIBOR
Week 1 ........ 1.98%
Week 2 ........ 1.66%
Week 3 ........ 1.52%
Week 4 ........ 1.35%
Week 5 ........ 1.60%
Week 6 ........ 1.63%
Week 7 ........ 1.67%
Week 8 ........ 1.88%
Week 9 ........ 1.93%



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  • CreatedOctober 31, 2014
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