In part b (i), I understand that the q wants us to use any two rates to show the interest payment doesn't change but I am a little confused over a couple of the numbers. Where does the $11.52m and $17.92m come from? Also why is the fee 0.64 for the 3% and 5%?
Thanks
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Sembilan Co June 2012
9y ago#1The question says that they are borrowing at the spot yield plus 60 basis point.
So if the yield rate is 3%, they will be paying 3.6%.
So the interest is 3.6% x $320M = $11.52M.
(same logic for 5%)
As far as the fee is concerned, the question says that the fee is 20 basis points i.e. 0.20%
0.20% x $320M = $0.64M.
Thank you
9y ago#3You are very welcome :-)
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