- 103 - could not have earned a profit on a net present value basis unless interest rates exceeded their expected levels, but a much smaller increase would have been sufficient to break even. We reviewed historical data to assess the likelihood that 3-month LIBOR would have risen by the requisite amount for Colgate to break even. The record includes published records of market interest rates extending back to January 1984. There are 71 observations of 3-month LIBOR as of the first day of each month between January 1984 and November 1989. Not one of the 71 monthly quotations is 300 basis points or more above the quotations for the 1 to 6 previous months. Only three of the quotations represent a level 200 basis points or more above any quotations during the previous 6 months. There is no month for which 3-month LIBOR was above 12.13 percent. It reached or exceeded 11 percent in 6 months, all in mid-1984. In 30 months, it fell within the range of 8 to 9.99 percent, and it fluctuated between 10.31 and 8.56 percent during the first 11 months of 1989. The longest that 3-month LIBOR remained at or above 10 percent was 9 consecutive months in 1984. Thereafter, the longest period was 2 consecutive months in early 1989. In the late summer and early autumn of 1989, Colgate's treasury department confidently expected that interest rates would follow a downward trend for the foreseeable future.Page: Previous 93 94 95 96 97 98 99 100 101 102 103 104 105 106 107 108 109 110 111 112 Next
Last modified: May 25, 2011