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Grupo Bimbo ( Mexico ) . Grupo Bimbo, headquartered in Mexico City, is one of the largest bakery companies in the world. On January 1
Grupo Bimbo Mexico Grupo Bimbo, headquartered in Mexico City, is one of the largest bakery companies in the world. On January st when the spot exchange rate is MXN USD the company borrows USD million from a New York bank for one year at interest Mexican banks had quoted for an equivalent loan in Mexican pesos During the year, US inflation is and Mexican inflation is At the end of the year the firm repays the dollar loan. a If Bimbo expected the spot rate at the end of one year to be that equal to purchasing power parity, what would be the cost to Bimbo of its dollar loan in pesodenominated interest? b What is the real interest cost adjusted for inflation to Bimbo, in pesodenominated terms, of borrowing the dollars for one year, again assuming purchasing power parity? c If the actual spot rate at the end of the year turned out to be MXN USD what was the actual pesodenominated interest cost of the loan?
Grupo Bimbo Mexico Grupo Bimbo, headquartered in Mexico City, is one of the largest bakery companies in the world. On January st when the spot exchange rate is MXN USD the company borrows USD million from a New York bank for one year at interest Mexican banks had quoted for an equivalent loan in Mexican pesos During the year, US inflation is and Mexican inflation is At the end of the year the firm repays the dollar loan.
a If Bimbo expected the spot rate at the end of one year to be that equal to purchasing power parity, what would be the cost to Bimbo of its dollar loan in pesodenominated interest?
b What is the real interest cost adjusted for inflation to Bimbo, in pesodenominated terms, of borrowing the dollars for one year, again assuming purchasing power parity?
c If the actual spot rate at the end of the year turned out to be MXN USD what was the actual pesodenominated interest cost of the loan?
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