Interest

EBK CONTEMPORARY FINANCIAL MANAGEMENT
14th Edition
ISBN:9781337514835
Author:MOYER
Publisher:MOYER
Chapter16: Working Capital Policy And Short-term Financing
Section: Chapter Questions
Problem 14P
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Grecian Tile Manufacturing of Athens, Georgia, borrows $1,500,000 at LIBOR plus a lending margin of 1.39 percent per annum on a
six-month rollover basis from a London bank. If six-month LIBOR is 5.20 percent over the first six-month interval and 5.445 percent
over the second six-month interval, how much will Grecian Tile pay in interest over the first year of its Eurodollar loan? (Do not round
intermediate calculations. Round your answer to 2 decimal places.)
Interest
Transcribed Image Text:Grecian Tile Manufacturing of Athens, Georgia, borrows $1,500,000 at LIBOR plus a lending margin of 1.39 percent per annum on a six-month rollover basis from a London bank. If six-month LIBOR is 5.20 percent over the first six-month interval and 5.445 percent over the second six-month interval, how much will Grecian Tile pay in interest over the first year of its Eurodollar loan? (Do not round intermediate calculations. Round your answer to 2 decimal places.) Interest
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