Question

The Bensington Glass Company entered into a loan agreement with the​ firm's bank to finance the​ firm's working capital. The loan called for a floating rate that was 25 basis points

​(0.25 ​percent) over an index based on LIBOR. In​ addition, the loan adjusted weekly based on the closing value of the index for the previous week and had a maximum annual rate of 2.19 percent and a minimum of 1.76 percent. Calculate the rate of interest for weeks 2 through 10.

Date	LIBOR
Week 1	1.98%
Week 2	1.62%
Week 3	1.48%
Week 4	1.34%
Week 5	1.57%
Week 6	1.67%
Week 7	1.75%
Week 8	1.91%
Week 9	1.91%

Answer 1

ROI = Previous week Closing LIBOR +0.25%

Subject to Maximum 2.19% and Minimum 1.76%

So ROI From week 2 to 10 will be :

Date	LIBOR	Basis Point	LIBOR + basis Point Rate of Interest	Max ROI =2.19% Min ROI =1.76% So Rate of interest
Week 2	1.98%	0.25%	2.23%	2.19%
Week 3	1.62%	0.25%	1.87%	1.87%
Week 4	1.48%	0.25%	1.73%	1.76%
Week 5	1.34%	0.25%	1.59%	1.76%
Week 6	1.57%	0.25%	1.82%	1.82%
Week 7	1.67%	0.25%	1.92%	1.92%
Week 8	1.75%	0.25%	2.00%	2.00%
Week 9	1.91%	0.25%	2.16%	2.16%
Week 10	1.91%	0.25%	2.16%	2.16%