How would the cfo obtain the new interest rate

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Reference no: EM133269800

Question - The chief financial officer (CFO) of a Virgin Airlines has arranged a term loan for the company with the following conditions attached. The loan will have a variable rate of interest of BBSW plus 85 basis points. The loan interest will be reset every three months for the duration of the loan.

a. First, describe what a term loan is and explain, in detail, the operation of these specific loan conditions.

b. How would the CFO obtain the new interest rate every three months? Explain in detail, including the source of data and working steps in any calculation. Clearly state the assumption required for your calculation to be meaningful.

Reference no: EM133269800

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