TABLE 15.1 Use the Information for Polaris Corporation to Answer Following Question(s)

question 8

Multiple Choice

TABLE 15.1
Use the information for Polaris Corporation to answer 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 Table 15.1. What portion of the cost of the loan is at risk of changing?

• A) the LIBOR rate
• B) the spread
• C) the upfront fee
• D) all of the above

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