A borrower has the option of accepting a fixed rate loan for five years at...
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A borrower has the option of accepting a fixed rate loan for five years at or a floating rate loan of LIBOR plus Assume the current LIBOR rate is If the floating rate loan was chosen, did the borrower make the right decision if the LIBOR rates at the beginning of the next four years are and Note that the LIBOR rate at the beginning of the year is used to determine the payment at the end of the year.per one million dollar borrowing NPV of floating rate borrowing is discount rate Floating rates LIBOR Libor rates Borrow $CF now, CF$ CF$ CF$ CF$ CF$ CF in million dollars a $ b $ c $ d $ e $ f $ g $ h $ i $absolute value 
A borrower has the option of accepting a fixed rate loan for five years at or a floating rate loan of LIBOR plus Assume the current LIBOR rate is If the floating rate loan was chosen, did the borrower make the right decision if the LIBOR rates at the beginning of the next four years are and Note that the LIBOR rate at the beginning of the year is used to determine the payment at the end of the year.per one million dollar borrowing NPV of floating rate borrowing is discount rate
Floating rates LIBOR Libor rates
Borrow $CF now, CF$ CF$ CF$ CF$ CF$
CF in million dollars
a $ b $
c $
d $
e $ f $
g $ h $ i $absolute value
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