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

question 7

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. 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:

Output Module

A component in a control system that sends signals or power from the system to the external environment.

PLC System

A PLC system (Programmable Logic Controller) is a digital computer used for automation of electromechanical processes, such as control of machinery on factory assembly lines.

Programming Terminal

A combination of keyboard and monitor used to insert, modify, and observe programs stored in a PLC.

Preventive Maintenance

Scheduled maintenance activities designed to prevent equipment failures before they occur.