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125 Morning Star Air (China). Moming Star Air, headquartered in Kunming, China, needs US $30,000,000 for one year to finance working capital. The airline has
125 Morning Star Air (China). Moming Star Air, headquartered in Kunming, China, needs US $30,000,000 for one year to finance working capital. The airline has two alternatives for borrowing: a. Borrow US $30,000,000 in Eurodollars in London at 7.15% per annum b. Borrow HK $233,784,000 in Hong Kong at 6.85% per annum, and exchange these Hong Kong dollars at the present exchange rate of HK\$7.7928/USS for U.S, dollars. At what ending exchange rate would Morning Star Air be indifferent between borrowing U.S. dollars and borrowing Hong Kong dollars
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