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

question 42

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. If the LIBOR rate jumps to 5.00% 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) 5.25%
• B) 5.50%
• C) 6.09%
• D) 6.58%

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Definitions:

Predecessors

Refers to elements or tasks that must be completed before a certain task or element can begin in scheduling and project management.

Successor

An entity or individual that follows or comes after another in a specific role, position, or sequence.

Pessimistic Time

The “worst” activity time that could be expected in a PERT network.

Unfavorable Conditions

Circumstances or situations that are detrimental to the success, operation, or performance of a process, project, or activity.