TABLE 9.1 Use the Information for Polaris Corporation to Answer Following Question(s)

question 28

Multiple Choice

TABLE 9.1
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 to Table 9.1. What is the all-in-cost (i.e., the internal rate of return) of the Polaris loan including the LIBOR rate, fixed spread and upfront fee?

• A)4.00%
• B)5.00%
• C)5.53%
• D)6.09%

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Definitions:

Wage Differences

Variations in pay for jobs that are based on factors like location, skill level, experience, and industry demand.

Discrimination

The unjust or prejudicial treatment of different categories of people, especially on the grounds of race, age, sex, or disability.

Surplus Of Labor

A situation where the supply of workers exceeds the demand for labor, often leading to unemployment or underemployment.

Minimum Wage

The lowest legally permissible wage that employers can pay their workers, established by government laws.