Jumbo has a $20M bank loan that it must refinance now or six months from now. Interest rates will increase and result in materially higher loan payments. The current five-year loan rate is 2.50% and will increase to between 5.50% (if refinanced today) and 7.50% (six months from now) at the end of the term of the loan? The five-year rate for both cases is required for Jumbo due to contractual obligations in the shareholder agreement. $500K has been spent on interest payments each year for the last 4.5 years?

Answer rating: 100% (QA)

Jumbo can either refinance the loan now at a 550 interest rate or wait for six months and refinance at a 750 interest rate The loan amount is 20 milli... View the full answer