Question 21.ss.5: American Bancorp is planning to make a $3.5 million loan to ...

Fundamentals of Corporate Finance

American Bancorp is planning to make a $3.5 million loan to a French firm. Currently, LIBOR is at 4.5 percent. American considers a default risk premium of 1.15 percent, a foreign exchange risk premium of 0.35 percent, and a country risk premium of 0.13 percent to be appropriate for this loan. What is the loan rate charged by American Bancorp?

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