Sheridan needs to borrow $4 million for an upgrade to its headquarters and manufacturing facility. Management has decided to borrow using a five-year term loan from its existing commercial bank. The prime rate is 4 percent, and Sheridan’s current rating is prime + 2.49 percent. The yield on a five-year U.S. Treasury note is 1.99 percent, and the three-month U.S. Treasury bill rate is 0.10 percent. What is the estimated loan rate for the five-year bank loan? Estimated loan rate is enter the estimated loan rate in percentages %
Sheridan needs to borrow $4 million for an upgrade to its headquarters and manufacturing facility. Management has decided to borrow using a five-year term loan from its existing commercial bank. The prime rate is 4 percent, and Sheridan’s current rating is prime + 2.49 percent. The yield on a five-year U.S. Treasury note is 1.99 percent, and the three-month U.S. Treasury bill rate is 0.10 percent. What is the estimated loan rate for the five-year bank loan? Estimated loan rate is enter the estimated loan rate in percentages %
Chapter2: The Domestic And International Financial Marketplace
Section: Chapter Questions
Problem 7P
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Sheridan needs to borrow $4 million for an upgrade to its headquarters and manufacturing facility. Management has decided to borrow using a five-year term loan from its existing commercial bank. The prime rate is 4 percent, and Sheridan’s current rating is prime + 2.49 percent. The yield on a five-year U.S. Treasury note is 1.99 percent, and the three-month U.S. Treasury bill rate is 0.10 percent. What is the estimated loan rate for the five-year bank loan?
Estimated loan rate is | enter the estimated loan rate in percentages % |
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