=+LG 5 P195 Euromarket investment and fund rising Suppose that Audi AG has two main subsidiaries, one

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=+LG 5 P19–5 Euromarket investment and fund rising Suppose that Audi AG has two main subsidiaries, one in India (local currency is Indian rupee, INR) and one in Indonesia

(local currency is Indonesian rupiah, IDR). Forecasts of business operations indicate the following short-term financing position for each subsidiary (in equivalent euros):

India: €50 million excess cash to be invested (lent)

Indonesia: €35 million funds to be raised (borrowed)

The management of Audi gathered the following data.

Currency Item EUR INR IDR Spot exchange rates 76.329 (INR/€) 16,164.39 (IDR/€)

Forecast percent change -2.5% +4.0%

Interest rates Nominal Euromarket 1.00% 7.50% 9.25%

Domestic 0.75% 7.25% 9.65%

Effective Euromarket ——— ——— ———

Domestic ——— ——— ———

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Principles Of Managerial Finance

ISBN: 9781292261515

15th Global Edition

Authors: Chad J. Zutter, Scott Smart

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