Question
A Mexican company operates stores in Mexico City and has all of its revenues in Mexican pesos. In order to build more stores, it borrowed
A Mexican company operates stores in Mexico City and has all of its revenues in Mexican pesos. In order to build more stores, it borrowed money in USD. Therefore:
A stronger USD will hurt the company
The company does not need to worry because the interest rate difference acts as a hedge
The exchange rate does not matter if the interest rate is fixed.
A stronger USD will benefit the company
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Intermediate Accounting
Authors: J. David Spiceland, James Sepe, Mark Nelson, Wayne Thomas
9th Edition
125972266X, 9781259722660
