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eiteman_178963_im14

# eiteman_178963_im14 - Problem 14.1 Andina S.A From which...

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Problem 14.1 Andina, S.A. From which source should Andina borrow? Assumptions Values Principal borrowing need \$8,000,000 Maturity needed, in weeks 8 Rate of interest charged by ALL potential lenders 4.000% 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 \$49,777.78 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 \$49,095.89 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 \$53,333.33 Andina should borrow in Great Britain because it has the lowest interest cost.

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Problem 14.3 Raid Gauloises Given interest rate expectations, which loan is the best deal? Expected Chg Assumptions Values in LIBOR Principal borrowing need € 20,000,000 Maturity needed, in years 4.00 Current euro-LIBOR 4.000% 2.000% 0.500% Banque de Paris' initiation fee 1.800% 2.500% 0.250% Banque de Sorbonne's initiation fee 0.000% Raid Gauloises must evaluate both loan proposals under both potential interest rate scenarios.

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eiteman_178963_im14 - Problem 14.1 Andina S.A From which...

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