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Cartco needs to borrow $4 million for an upgrade to its headquarters and manufacturing facility. Management has decided to borrow using a five-year term loan from its existing commercial bank. The prime rate is 3 percent, and Cartco’s current rating is prime + 2.45 percent. The yield on a five-year U.S. Treasury note is 1.91 percent, and the three-month U.S. Treasury bill rate is 0.08 percent. What is the estimated loan rate for the five-year bank loan? (Round answer to 2 decimal places, e.g. 52.75%.)

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Business Economics, Economics

Category:- Business Economics
Reference No.:- M91673533

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