Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Haier-China can borrow fund in China with an interest rate of 11.15% to invest 1.78 million Australian dollars (A$) and expected return of A$1.92 million

Haier-China can borrow fund in China with an interest rate of 11.15% to invest 1.78 million Australian dollars (A$) and expected return of A$1.92 million next year. Assume that Haier-China and Biopharma-Australia engages in a parallel loan in which the Biopharma-Australia gives Haier-China A$1.78 million in exchange for a loan in Chinese yuan (CNY) at the current exchange rate CNY3.2290/A$. These loans will be repaid by both parties at the end of one year. Assume that next year, Haier-China will pay Biopharma-Australia 14.49% interest on A$1.78 million and that the Biopharma-Australia will pay Haier-China 7.27% interest on the Chinese yuan loan. Also, Haier-China believes that the A$ will appreciate to CNY3.7038/A$ next year. How much the Haier-China will make a profit or loss in CNY 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

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Personal Finance Version 3.1

Authors: Rachel S. Siegel

3rd Edition

1453334807, 978-1453334805

More Books

Students also viewed these Finance questions

Question

Formulate strategies and recommendations for action on HRM issues.

Answered: 1 week ago