10. Siemens can borrow euros at 12% or pesos at 80% for one year. The peso:euro exchange...
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10. Siemens can borrow euros at 12% or pesos at 80% for one year. The peso:euro exchange rate is expected to move from €1 = Ps3300 currently to €1 = Ps4500 by year’s end.
(a) What is the expected after-tax euro cost of borrowing euros for one year if the Mexican corporate tax rate is 53%?
(b) What is Siemens’ expected after-tax euro cost of borrowing pesos for one year?
(c) At what end-of-year exchange rate will the after-tax peso cost of borrowing euros equal the after-tax peso cost of borrowing pesos?
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Related Book For
International Financial Management
ISBN: 9781118929322
10th Edition
Authors: Alan C. Shapiro, Peter Moles
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