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Self-Study Problem 21.05

American Cullumber management is planning to make a $2.8 million loan to a French

firm. Currently, LIBOR is at 1.2 percent. American management considers a default risk premium of 0.90 percent, a foreign exchange rate risk premium of 0.30 percent, and a country risk premium of 0.13 percent to be appropriate for this loan.

What is the loan rate charged by American Cullumber?

Loan rate charged


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