Chapter_09 - Problem 9.1 Chavez S.A. Assumptions Values...

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Unformatted text preview: Problem 9.1 Chavez S.A. Assumptions Values Principal borrowing need $8,000,000 Maturity needed, in weeks 8 Rate of interest charged by ALL potential lenders 6.250% New York interest rate practices Interest calculation uses: Exact number of days in period 56 Number of days in financial year 360 So the interest charge on this principal is $77,777.78 Great Britain interest rate practices Interest calculation uses: Exact number of days in period 56 Number of days in financial year 365 So the interest charge on this principal is $76,712.33 Swiss interest rate practices Interest calculation uses: Assumed 30 days per month for two months 60 Number of days in financial year 360 So the interest charge on this principal is $83,333.33 Chavez should borrow in Great Britain because it has the lowest interest cost. Chavez S.A., a Venezuelan company, wishes to borrow $8,000,000 for eight weeks. A rate of 6.250% per annum is quoted by potential lenders in New York, Great Britain, and Switzerland using, respectively, international, British, and the Swiss-Eurobond definitions of interest (day count conventions). From which source should Chavez borrow? Problem 9.4 Problem 9....
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This note was uploaded on 07/10/2011 for the course BUS 464 taught by Professor Pham during the Spring '11 term at Humboldt State University.

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Chapter_09 - Problem 9.1 Chavez S.A. Assumptions Values...

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