Answer in detail

This is relating to foreign currency transaction

{c) The company arranges a US-dollar interest-only loan on 1 January 2018 for US$20 million. The loan is for la 10-year period at an interest rate of 11.5 per cent per annum. Interest is payable annually. Concerned about the volatility of the Australian dollar against the US dollar, the company takes out a hedge contract on the loon, payable on January 2018. The hedge contract covers the first two years interest payments. The hedge rate is set at A$1.00 = US$0.65. The following exchange rates are applicable: Pote Spot rote Forward rate January 2018 SUSC 69 Sus065 30 June 2018 SUSO 64 SUSO 60