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    Interest on Eurodollar loan

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    A US company CTM borrows $1,500,000 at LIBOR + 125bp p.a. on a 6M rollover basis from a London bank. If 6M LIBOR is 4 1/2% over the 1st 6M interval and 5 3/8% over the 2nd 6M interval, how much will CTM pay in interest over the 1st year of its Eurodollar loan?

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    Solution Preview

    125 bp= 1.25% %

    interest payment for first half year
    Principal $15,000,000
    LIBOR= 4.50%
    Therefore interest ...

    Solution Summary

    The solution calculates Interest on Eurodollar loan borrowed on a 6M rollover basis from a London bank.