Acme Corporation $1,000,000,000 Term B Debt

***Note that this question concerns the underlying Term Loan***

Acme Corporation enters into a 5-year, $1,000,000,000.00 term loan with JP Morgan bank on January 1, 2019. JP Morgan is the lead with 60% and has syndicated the risk with PNC, which assumes the remaining 40%..

Loan interest is calculated yearly and is based on 12 month LIBOR plus a spread. The spread is based on the companys credit rating. The spread ranges from 100 BPS to 300 BPS. If Acme is rated S&P AAA, the spread is 100 BPS. If it is rated less than S&P AAA, the spread is 300 BPS.

Loan interest is calculated ACT/360 with the first payment due January 1, 2020 and subsequent yearly payments on the 1st of January each year.

Principal payments are to be paid equally at $200,000,000 each year for the 5 years.

12 month prospective LIBOR is the following at each date:

1/1/2019 2%

1/1/2020 2.5%

1/1/2021 3%

1/1/2022 3.5%

1/1/2023 4%

Acme S&P Credit Ratings

1/1/2019 AAA

1/1/2020 AAA

1/1/2021 A

1/1/2022 BBB

1/1/2023 BBB

WHAT IS THE ALL-IN INTEREST RATE FOR THE 1/1/2022 LOAN PAYMENT? SHOW YOUR WORK