Answered

Looking for trustworthy answers? Westonci.ca is the ultimate Q&A platform where experts share their knowledge on various topics. Join our platform to connect with experts ready to provide precise answers to your questions in different areas. Our platform offers a seamless experience for finding reliable answers from a network of knowledgeable professionals.

Grecian Tile Manufacturing of Athens, Georgia, borrows $1,500,000 at LIBOR plus a lending margin of 1.25 percent per annum on a six-month rollover basis from a London bank. If six-month LIBOR is 4.5 percent over the first six-month interval and 5.375 percent over the second six-month interval, how much will Grecian Tile pay in interest over the first year of its Eurodollar loan

Sagot :

Answer: 92812.50

Explanation:

The following information can be derived from the question:

Loan principal = $1,500,000

LIBOR for 1st 6 months = 4.50%

LIBOR for last 6 months = 5.375%

Lending margin per annum = 1.25%

The interest will then be:

= 1,500,000 × [(4.50% + 1.25%)/2] + 1,500,000 × [(5.375% + 1.25%)/2]

= 1,500,000 × [(0.045 + 0.0125)/2] + 1,500,000 × [(0.05375 + 0.0125)/2]

= 92,812.50

Therefore, the interest is 92812.50.

Tundexi

The amount that Grecian Tile will pay in interest over the first year of its Eurodollar loan is $92,812.5.

Given information

Loan principal = $1,500,000

LIBOR for 1st 6 months = 4.50%

LIBOR for last 6 months = 5.375%

Lending margin per annum = 1.25%

Interest over first year = $1,500,000*[(4.50% + 1.25%)/2] + $1,500,000 *[(5.375% + 1.25%)/2]

Interest over first year = $43,125 + $49,687.50

Interest over first year = $92,812.50

In conclusion, the amount that Grecian Tile will pay in interest over the first year of its Eurodollar loan is $92,812.5.

Read more about Interest

brainly.com/question/16134508

We hope you found this helpful. Feel free to come back anytime for more accurate answers and updated information. We hope our answers were useful. Return anytime for more information and answers to any other questions you have. Get the answers you need at Westonci.ca. Stay informed by returning for our latest expert advice.