Petrol Iberico a European gas company is borrowing $500,000,000 via a syndicated eurocredit for 6 years at
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Question:
Petrol Iberico a European gas company is borrowing $500,000,000 via a syndicated eurocredit for 6 years at 110 basis point over LIBOR. LIBOR for the loan will be reset every six months. The funds will be provided by a syndicate of eight leading investment bankers, which will charge up-front fees totaling 1.2% of the prinicipal amount. What is the effective interest cost for the first year if the annual LIBOR is 4.40% during the first six months and 4.80% during the second six months. The effective interest cost for the first year is _____________% (Round to two decimal places.)
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