calculate cost of debt using LIBOR and spread

[yasser almansoor]

hello ladies and gentel men
Example 13 book of corporate finance page 62
the example ask for calculate the weighted cost of debt by the LIBOR + premuim of debt to capital ratio (spreads)
can someone show me how we can summing the points of 200 with LIBOR rate of 4.5% please.

 

[JayWill]

Assuming I’m understanding what you’re asking,
200 basis points (bps) = 2% + 4.5% = 6.5%
1 bps = .0001
10 bps = .001
100 bps = .01

 

[maureenash]

Use bankers interest rate for the montly or 3 month or full term payment of interest. Your rate is the LIBOR rate plus points. Interest will be ((1 + (rate/360))^days - 1)* loan amount, paid at the end of each days of the period.Custom essay writing service is giving the dissertation draft writing guidelines for the students.