The Bensington Glass Company entered into a loan agreement with the firm's bank to finance the firm's working capital. The loan called for a floating rate that was 27 basis points (0.27percent) over an index based on LIBOR. In addition, the loan adjusted weekly based on the closing value of the index for the previous week and had a maximum annual rate of 2.19 percent and a minimum of 1.72 percent. Calculate the rate of interest for weeks 2 through 10. Date LIBOR Week 1 1.93% Week 2 1.64% Week 3 1.46% Week 4 1.36% Week 5 1.59% Week 6 1.65% Week 7 1.75% Week 8 1.92% Week 9 1.87%

The Bensington Glass Company entered into a loan agreement with the firm's bank to finance the firm's working capital. The loan called for a floating rate that was 27 basis points (0.27percent) over an index based on LIBOR. In addition, the loan adjusted weekly based on the closing value of the index for the previous week and had a maximum annual rate of 2.19 percent and a minimum of 1.72 percent. Calculate the rate of interest for weeks 2 through 10. Date LIBOR Week 1 1.93% Week 2 1.64% Week 3 1.46% Week 4 1.36% Week 5 1.59% Week 6 1.65% Week 7 1.75% Week 8 1.92% Week 9 1.87%

EBK CONTEMPORARY FINANCIAL MANAGEMENT

14th Edition

ISBN:9781337514835

Author:MOYER

Publisher:MOYER

Chapter19: Lease And Intermediate-term Financing

Section: Chapter Questions

Problem 16P

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The Bensington Glass company entered into a loan agreement with the firm’s bank to finance the firm’s working capital. The loan called for a floating rate that was 27 basis points (0.27 percent) over an index based on LIBOR. In addition, the loan adjusted weekly based on the closing value of the index for the previous week and had a maximum annual rate of 2.16 percent and a minimum of 1.75 percent. Calculate the rate of interest for weeks 2 through 10. Date LIBOR Week 1 1.99% Week 2 1.62% Week 3 1.49% Week4 1.35% Week 5 1.57% Week 6 1.64% Week 7 1.74% Week 8 1.89% The rate of interest for week 2 is Round to two decimal places
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