Question
ABC corporation based in the America reserve cash asset of RM 500 millions in Malaysia. It is expected that the value of RM will continue
ABC corporation based in the America reserve cash asset of RM 500 millions in Malaysia. It is expected that the value of RM will continue to depreciate against US and transporting the cash to the country of origin may occur loss. However, they must deport the cash as soon as possible to the origin country as they are about to halt their operation in Malaysia. Assume that RM 1 = $0.25 as the moment and they expect that the value of RM will further depreciate to RM 1 = $0.17 in two weeks time and the same time still posses debt balance of about RM 35.29 Million. Aside of that they also expect that 1 Pound = $1.2 USD while 1 Pound = 5 Euro and 1 Euro = $0.4 USD in two weeks time. The entire transaction cost involve 1.33 million USD and only required to be pay in full at the end of transaction. What is the the rational action be taken by ABC corporation in maximizing currency value which is going to be deported to the America and what is the amount of USD ? Elaborate the amount of money calculated which is successfully deported to America. (15 Marks)
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