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b) The United States Multinational subsidiary company located in Malaysia could borrow one year short-term financing in Malaysia at 6% or in US at 7%.

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b) The United States Multinational subsidiary company located in Malaysia could borrow one year short-term financing in Malaysia at 6% or in US at 7%. The Ringgit Dollar exchange rate is expected to move from RM3.2000 equal to US$1 to RM3.2200 equal to US$1 by end of the year. The Malaysian government charges 25% corporate tax for that year. i) Ascertain which currency loan is better option for the subsidiary to borrow and justify your answer. (7 marks) ii) Determine exchange rate that would make the subsidiary is indifferent between borrowing in Malaysia and in (3 marks) US

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