There is a problem that I cannot solve. Please, help me.
A company wants to borrow 100,000,000. The arrangement fee is 2%. Different cost and expenses are 150,000. The company will pay 0.25% for unused money. The maturity is 3 year. Interest is libor + 4.25% (libor = 4.3%). Central bank requires 2% reserve. The company will take 2 tranches in amount of 25,000,000 and 75,000,000 during 6 monthes.
The question is when the company should take tranches to minimize expenses.
Xposted to quants and economics