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Hi everybody,
I have a concern about the which interest rate the company is going to pay when the question gives both fixed interest rate and floating interest rate.
I am doing the question Buryecs Co in Mar 2017 exam. In part b (i) answer, Buryecs pay fixed rate at 4% instead of floating rate of bank rate + 0.6%.
Please give me an advise to understand this topic.
Thanks in advance everybody.
First see which rate has the highest difference, fixed or variable, in the question you have mentioned, the fixed rate has the highest difference.
Then see which party is able to get the cheaper rate in the rate having highest difference.Buryecs is able to get the fixed rate cheaper than the counterparty, so the fixed rate is taken.
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