Teltrex International Can Borrow $3,000,000 at LIBOR Plus a Lending

question 38

Multiple Choice

Teltrex International can borrow $3,000,000 at LIBOR plus a lending margin of .75 percent per annum on a three-month rollover basis from Barclays in London.Suppose that three-month LIBOR is currently 5 17/32 percent.Further suppose that over the second three-month interval LIBOR falls to 5 1/8 percent.How much will Teltrex pay in interest to Barclays over the six-month period for the Eurodollar loan?

• A)$79,921.875
• B)$91,171.88
• C)$96,174.39
• D)$364,687.52

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Definitions:

Inputs

Resources used in the production process to create goods and services, including labor, materials, and capital.

Total Output

The total quantity of goods or services produced by a firm or economy over a specific period.

Isoquants

Curves that represent the combinations of inputs that yield the same level of output, used in production theory.

Perfectly Substitutable

Products or services that can be used in place of one another without any loss of utility or value to the consumer, often influencing competitive markets.