Question
Biopharma-Australia can borrow fund in Australia with an interest rate of 11.88% to invest 1.87 million Chinese yuan (CNY) and expected return of CNY2.17 million
Biopharma-Australia can borrow fund in Australia with an interest rate of 11.88% to invest 1.87 million Chinese yuan (CNY) and expected return of CNY2.17 million next year. Assume that Biopharma-Australia and Haier-China engage in a parallel loan in which the Haier-China gives Biopharma Australia CNY1.87 million in exchange for a loan in Australian dollar (A$) at the current exchange rate A$0.2690/CNY. These loans will be repaid by both parties at the end of one year. Assume that next year, Biopharma-Australia will pay the Haier-China 14.73% interest on CNY1.87 million and that the Haier-China will pay Biopharma-Australia 7.12% interest on the Australian dollar loan. Also, Biopharma-Australia believes that the CNY willdepreciateto A$0.2131/CNY next year. How much the Biopharma-Australia will make a profit or loss in A$ from this parallel loan agreement in one year.(enter the whole number without sign or symbol)
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started