Floating Rate Note Coupon Calculation

[dinesh.sundrani]

I did screwup on this one too
Compute the coupon payment for a quarterly pay $1,000,000, LIBOR + 150 basis points floating-rate note whose interest is calculated using the act/360 daycount convention. At the beginning of the quarter LIBOR was fixed at 7.0% and the quarter has 92 days.
a. $17,888.89
b. $21,250.00
c. $21,722.22
d. $42,500.00
- Dinesh S

 

[nann_82]

Is is not C - $21,722.22?

 

[reema]

C?

 

[cielito]

C?

 

[raghuram_86]

how did you guys get C? Would you mind sharing your calculations?

 

[dinesh.sundrani]

Correct answer is C
(.07 + .015)($1,000,000) x (92/360) = $21,722.22

 

[cielito]

LIBOR + 150 bp = 7 + 1.5 = 8.5%
1,000,000 x 8.5% x 92/360