Polar loan including libor rate-fixed spread-upfront fee

Assignment Help Financial Management

Reference no: EM131874378

Polaris is taking out a $5,000,000 two-year loan at a variable rate of LIBOR plus 1.00%. The LIBOR rate will be reset each year at an agreed upon date. The current LIBOR rate is 4.00% per year. The loan has an upfront fee of 2.00%

Loan Interest Rates Year 0 Year 1 Year 2 LIBOR (Floating) 4.00% 4.00% 4.00% Spread (Fixed) 1.00% 1.00% 1.00% Total Interest Payable 5.00% 5.00% 5.00% Interest Cash Flows on Loan LIBOR (Floating) ($200,000) ($200,000) Spread (Fixed) ($50,000) ($50,000) Total Interest ($250,000) ($250,000) Loan Proceeds (Repayment) $4,900,000 ($5,000,000) Total Loan Cash Flows $4,900,000 ($250,000) ($5,250,000)

What is the all-in-cost (i.e., the internal rate of return) of the Polar loan including the LIBOR rate, fixed spread and upfront fee?

Reference no: EM131874378

Questions Cloud

Prepare an incremental analysis for the special order : Gruden Company produces golf discs which it normally sells to retailers for $7.23 each. Prepare an incremental analysis for the special order

Examining the variety of data types : How flexible do you consider Tableau at showing the different dimensions of Big Data? The "5V's of Big Data are: Variety of data types, Volume of the Data.

Identify three variables that were not specifically control : A.) Identify three variables that were not specifically controlled in this experimental design

Define collective strength of the competitive forces : Do a Five Forces Analysis of the competition in the fast food industry. Discuss and evaluate the relative strengths of each of the five competitive forces.

Polar loan including libor rate-fixed spread-upfront fee : What is the all-in-cost (i.e., the internal rate of return) of the Polar loan including the LIBOR rate, fixed spread and upfront fee?

Explain which one intrigues you the most : Identify the 5 Ks of Sikhism, and explain which one intrigues you the most. Explain three ways that social trends affect formation of new religions movements.

Determining the molecules that signal for platelets : Imagine that a toxin in the bloodstream denatured the molecules that signal for platelets. predict how this would affect this feedback mechanism

Describe and discuss your favorite show : Describe and discuss your favorite show and how it depicts the family, marriage, and gender roles.

What is the equivalent annual cost of the tool : If the discount rate is 15% and the lathe will last for 4 years, what is the equivalent annual cost of the tool?

User Account

All Pages