The recent crisis and tensions in Ukraine led many to become concerned of the situation in...

  

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The recent crisis and tensions in Ukraine led many to become concerned of the situation in east Europe. From early on, Government of Canada intended to play an active role to ease the tension in the region. In recent months, Canadian government announced its support to the people and the current Ukraine government. In addition to Canadian government's diplomatic efforts, Canada has committed to providing financial assistance to Ukraine government and non-government organizations. One of such assistances is a subsidy loan to a Ukraine government agency. The terms of the loan are stipulated in the proposed Memorandum of Understanding. The key financial terms of the loan are: the total amount of the loan is $50 million; the loan is with a subsidized interest rate of 6.5% and is required to be paid off in 15 years; all payments are semi-annual basis; during 15 year loan period, only interest payments are required for the first 7 years. Then the loan amount is amortized and fully paid over the remaining 8 years. The current stated annual interest rate is 10%. What is the maximum interest rate for this loan to qualify as ODA? Please use linear interpolation to estimate the ODA threshold (7 marks) b) interest rate. The recent crisis and tensions in Ukraine led many to become concerned of the situation in east Europe. From early on, Government of Canada intended to play an active role to ease the tension in the region. In recent months, Canadian government announced its support to the people and the current Ukraine government. In addition to Canadian government's diplomatic efforts, Canada has committed to providing financial assistance to Ukraine government and non-government organizations. One of such assistances is a subsidy loan to a Ukraine government agency. The terms of the loan are stipulated in the proposed Memorandum of Understanding. The key financial terms of the loan are: the total amount of the loan is $50 million; the loan is with a subsidized interest rate of 6.5% and is required to be paid off in 15 years; all payments are semi-annual basis; during 15 year loan period, only interest payments are required for the first 7 years. Then the loan amount is amortized and fully paid over the remaining 8 years. The current stated annual interest rate is 10%. What is the maximum interest rate for this loan to qualify as ODA? Please use linear interpolation to estimate the ODA threshold (7 marks) b) interest rate.

Answer rating: 100% (QA)

ODA stands for Official Development Assistance which is a measure of assistance provided by countries to promote economic development and welfare of d... View the full answer