Web Application Chapter 8 page 301

On December 8, 1998, AT&T and IBM announced a series of strategic agreements under which AT&T will acquire IBM's Global Network business for $5 billion in cash. When companies deal in the billions of dollars, interest rates are a major concern. The prime rate is the rate banks charge on loans to their biggest and best business customers. To get an idea of the interest paid by some companies, go to www.att.com/ir/sec/commentary/qec_984q.html. This Web page is the AT&T Earnings Commentary for January 25, 1999. Scanning down through the article, locate the section Interest Expense and answer the following:

1. What was the interest expense for AT&T as of January 25, 1999?

2. Does the interest expense as of January 25, 1999 show an increase or decrease from the previous year?

3. According to the information located at www.ibm.com/annualreport/1998/notes/ibm98arno_l.html, interest paid and accrued on IBM and its subsidiaries' borrowing amounted to $1,585 million in 1998, $1,596 million in 1997 and $1,565 million in 1996.

1. The article notes the decrease in total interest expense in 1998 versus 1997 was due primarily to what?
2. What was the average interest rate for total debt in 1998,1997 and 1996?
3. What is the average dollar amount of interest paid and accrued on borrowing for 1998,1997 and 1996?

Include the date of the information used in your answer. This Web Application is not designed to introduce financial analysis, but rather to sharpen skills needed to locate information on the Internet.

© Copyright 2000 Addison Wesley Longman, Inc.