8-101 What Should Be the Rate on the Two-Year Loan

question 12

Multiple Choice

8-101 What should be the rate on the two-year loan in order for the value of the equity to remain at $10 million? Assume the interest rates for all other instruments decreased by 1 percent.

• A)5.50 percent.
• B)6.19 percent.
• C)4.15 percent.
• D)6.54 percent.
• E)7.25 percent.

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Definitions:

Five-number Summary

Consists of the minimum, first quartile, median, third quartile, and maximum, providing a quick overview of the distribution of a dataset.

Distribution

The way in which values in a dataset are spread out or distributed across a range of values or categories.

Symmetric

A characteristic where something is the same on both sides when divided by a central line.

Interquartile Range

A measure of variability, based on dividing a data set into quartiles.