Parramatta Enterprises (PE) has recently issued $24 million in floating rate notes in order to fund the
Question:
Parramatta Enterprises (PE) has recently issued $24 million in floating rate notes in order to fund the next stage of an investment project. The notes pay an annual coupon of BBSW plus 180 basis points. The company approaches Commonwealth Bank (CBA) to establish an intermediated vanilla swap. The swap contract sets a fixed rate of 7.50 per cent per annum and a reference rate of the 12-month BBSW.
At the first interest payment date, the BBSW is 7.65 per cent per annum. How much is PE required to pay CBA at the first interest payment date? (two decimal places, a negative number indicates that PE receives the payment)
Foundations of Financial Management
ISBN: 978-1259024979
10th Canadian edition
Authors: Stanley Block, Geoffrey Hirt, Bartley Danielsen, Doug Short, Michael Perretta