Cathay Pacific Airways (Hong Kong). Cathay Pacific Airways, headquartered in Hong Kong, needs HK$200,000,000 for one year

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Cathay Pacific Airways (Hong Kong). Cathay Pacific Airways, headquartered in Hong Kong, needs HK$200,000,000 for one year to finance working capital. The airline has two alternatives for borrowing:

a. Borrow HK$200,000,000 from a major bank in Hong Kong at 5.4550% per annum.

b. Borrow €20,000,000 in London at 5.0550%

and exchange these euros at a present rate of HK10.0000/€ for Hong Kong dollars.

At what ending exchange rate would Cathay Pacific Airways be indifferent between borrowing euros and borrowing Hong Kong dollar?

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Multinational Business Finance

ISBN: 9781292270081

15th Global Edition

Authors: David Eiteman, Arthur Stonehill, Michael Moffett

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Question Posted: Jun 04, 2024 02:18 AM

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Cathay Pacific Airways (Hong Kong). Cathay Pacific Airways, headquartered in Hong Kong, needs HK$200,000,000 for one year

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Multinational Business Finance

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