Austal Ship plans to borrow 2

Finance Dec 10, 2020

Austal Ship plans to borrow 2.89 million Australian dollars (A$) for three years. It obtains a floating rate loan from a bank at the interest rate equal to the LIBOR + 2.00 (%). Austal Ship also forecasts 3.76%, 4.43%, and 4.71% LIBOR in year1, year2, and year3, respectively. How much total interest Austal Ship needs to pay for A$2.89 millions in three years of the loan period? (enter the whole number without sign or symbol)

Expert Solution

Loan amount	2.89	million $
Interest rate	LIBOR +2%

Year	LIBOR	Interest rate	Inerest amount
1	3.76%	5.76%	0.166464
2	4.43%	6.43%	0.185827
3	4.71%	6.71%	0.193919
		Total interest payment in million $	0.54621

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