Question
Boeing, a U.S. aircraft company, needs to borrow EUR50 million for 10 years to invest in a logistic distribution network in Europe. Airbus, a European
Boeing, a U.S. aircraft company, needs to borrow EUR50 million for 10 years to invest in a logistic distribution network in Europe. Airbus, a European aircraft company, needs to borrow USD 10 million for 10 years to initiate an expansion project in the U.S. The current spot exchange rate is EUR 5/USD. The following table shows the borrowing costs these two companies face:
| Boeing | Airbus |
Borrowing cost in USD | 4.00% | 5.50% |
Borrowing cost in EUR | 7.00% | 8.00% |
Based on the given information, which company has the absolute advantage in borrowing both currencies? (Please type Boeing or Airbus)
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