Toys inc has 1m loan balance on its line of credit the, Ask an Expert

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Toys Inc. has $1m loan balance on its line of credit. The interest rate on the loan is 2% + Libor. As a result, Toys Inc. will have to pay floating interests.

The company is considering hedging the risk in the interest payment with a five-year interest rate swap. Then Toys Inc. should pay fixed (Libor/fixed) rate interest in the swap.

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Financial Management, Finance

Category:- Financial Management
Reference No.:- M92868294

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