Question: IBMs German unit is looking to borrow 7.5 million from Deutsche Bank. Deutsche Bank quotes a rate of three-month LIBOR plus 0.25 percent for the

IBM’s German unit is looking to borrow €7.5 million from Deutsche Bank. Deutsche Bank quotes a rate of three-month LIBOR plus 0.25 percent for the 90-day loan. Currently, the three-month LIBOR is 3.875 percent. What is IBM’s interest cost on the loan in Euros? If the on the payoff date is €0.8164/$, what is the dollar cost of the loan?

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