Farms FaC has a loan of 500,000 from Bailey Bank. Under the terms of the loan, FaC will pay interest annually to Bailey Bank based on LIBOR plus 120 basis points. In addition, FaC will pay the capital of 500,000 at the end of five years. FaC wants to know the annual interest cost it will incur. To fix the interest rate of the loan, FaC enters into a five-year interest rate swap with a notional amount of 500,000 and annual settlement dates. The terms of the swap are that FaC will make swap payments based on a fixed rate of 5.35% and receive the flow based on a variable rate of LIBOR plus 50 basis points. During the third year of the loan, the LIBOR rate is 5.6%. Calculate the net interest payment made by FaC at the end of the third year
Farms FaC has a loan of 500,000 from Bailey Bank. Under the terms of the loan, FaC will pay interest annually to Bailey Bank based on LIBOR plus 120 basis points. In addition, FaC will pay the capital of 500,000 at the end of five years. FaC wants to know the annual interest cost it will incur. To fix the interest rate of the loan, FaC enters into a five-year interest rate swap with a notional amount of 500,000 and annual settlement dates. The terms of the swap are that FaC will make swap payments based on a fixed rate of 5.35% and receive the flow based on a variable rate of LIBOR plus 50 basis points. During the third year of the loan, the LIBOR rate is 5.6%. Calculate the net interest payment made by FaC at the end of the third year
A First Course in Probability (10th Edition)
10th Edition
ISBN:9780134753119
Author:Sheldon Ross
Publisher:Sheldon Ross
Chapter1: Combinatorial Analysis
Section: Chapter Questions
Problem 1.1P: a. How many different 7-place license plates are possible if the first 2 places are for letters and...
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Farms FaC has a loan of 500,000 from Bailey Bank. Under the terms of the loan, FaC will pay interest annually to Bailey Bank based on LIBOR plus 120 basis points. In addition, FaC will pay the capital of 500,000 at the end of five years. FaC wants to know the annual interest cost it will incur.
To fix the interest rate of the loan, FaC enters into a five-year interest rate swap with a notional amount of 500,000 and annual settlement dates. The terms of the swap are that FaC will make swap payments based on a fixed rate of 5.35% and receive the flow based on a variable rate of LIBOR plus 50 basis points.
During the third year of the loan, the LIBOR rate is 5.6%. Calculate the net interest payment made by FaC at the end of the third year
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