Petrol Ibrico, a European gas company, is borrowing $500,000,000 through a six-year syndicated Euroloan at 110 basis

Petrol Ibérico, a European gas company, is borrowing $500,000,000 through a six-year syndicated Euroloan at 110 basis points 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, who will collect up-front fees totaling 1.4% of the principal amount. What is the effective interest cost for the first year if the annual LIBOR rate is 4.50% for the first six months and 4.70% for the second six months? 

-The effective interest cost for the first year is ___%. (Round to two decimal places.)

Answer rating: 100% (QA)

To calculate the effective interest cost for the first year we need to take into account the interes... View the full answer