TABLE 7.2 Use the Information for Polaris Corporation to Answer the Following

question 65

Multiple Choice

TABLE 7.2
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 7.2. 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%

---

Definitions:

External Locus

The belief that one's outcomes in life are controlled by external forces or fate rather than one's own efforts.

Erroneously Thinking

The process of making mistakes in reasoning or understanding; incorrect or faulty thinking.

High Self-Esteem

A positive assessment of one's own self-worth and capabilities.

Difficult Tasks

Activities or assignments that require significant effort, skill, or problem-solving abilities to complete.