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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 1st,
when the spot exchange rate is MXN10.85= USD1.00, the company borrows USD24.9 million from a New York bank for one year at 6.76%
interest (Mexican banks had quoted 9.57% for an equivalent loan in Mexican pesos). During the year, U.S. inflation is 2.6% and Mexican
inflation is 4.5%. 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 peso-denominated interest?
b. What is the real interest cost (adjusted for inflation) to Bimbo, in peso-denominated 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 MXN9.63= USD1.00, what was the actual peso-denominated interest cost of
the 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 peso-denominated interest?
If Bimbo expected the spot rate at the end of one year to be equal to purchasing power parity, the cost to Bimbo of its dollar loan
in peso-denominated interest is %.(Round to four decimal places.)
b. What is the real interest cost (adjusted for inflation) to Bimbo, in peso-denominated terms, of borrowing the dollars for one year, again
assuming purchasing power parity?
The real interest cost (adjusted for inflation) to Bimbo, in peso-denominated terms, of borrowing the dollars for one year, again assuming
purchasing power parity, is %.(Round to four decimal places.)
c. If the actual spot rate at the end of the year turned out to be MXN9.63= USD1.00, what was the actual peso-denominated interest cost of
the loan?
If the actual spot rate at the end of the year turned out to be MxN9.63$, the actual peso-denominated interest cost of the loan is
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