A basis point is .01%; 1% equals 100 basis points.

LIBOR + 75 basis points would be, in this example, 6.5% + .75% = 7.25%

7) Firm A is paying $750,000 in interest payments a year while Firm B is paying LIBOR plus 75 basis points on $10, 000, 000 loans. The current LIBOR rate is 6.5%.

Answer: $25, 000 to Firm B

Can someone explain to me the formula to do this? The only examples i have in the book do not include "basis points". I am not sure how to do that.

Thanks