TABLE 8.2 Use the Information for Polaris Corporation to Answer the Following

question 53

Multiple Choice

TABLE 8.2
Use the information for Polaris Corporation to answer the following question(s) .
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%

-Refer to Table 8.2.If the LIBOR rate falls to 3.00% after the first year what will be the all-in-cost (i.e.the internal rate of return) for Polaris for the entire loan?

• A)4.00%
• B)4.50%
• C)5.25%
• D)5.60%

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Definitions:

Information Overload

The state of being overwhelmed by the vast amount of information available, making it difficult to make decisions or focus.

Sustainability

The ability to maintain or improve certain processes, systems, or materials indefinitely without depleting resources or harming natural cycles.

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Perpetuity

A financial term describing an infinite series of periodic payments or cash flows that continue indefinitely, often used to calculate the present value of such payments.