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K-Roo Ltd.'s US subsidiary is expecting to receive AUD 5437 in 10 months from sales to an Australian customer. K-Roo wants to use a
K-Roo Ltd.'s US subsidiary is expecting to receive AUD 5437 in 10 months from sales to an Australian customer. K-Roo wants to use a money market hedge to lock in the USD value of the receivable. It observes the following interest and exchange rates: Annualized Australian 10-month interest rates: 7.9%-7.8% Annualized US 10-month interest rates: 2.9%-2.7% Spot USD/AUD rate: USD2.8/AUD. What is the USD value of this receivable using a money market hedge? O a. 15868.7729 O b. 14604.6577 O c. 15842.9491 O d. 2024.0782 O e. 5215.9492 K-Roo Ltd. wants to expand internationally and is looking at the Euromarkets. It has access to two bank syndicates that are willing to back a USD100 million, 3-year Eurodollar loan. Westpac charges a 0.85% fee and 1.47% interest. ANZ charges a 1.01% fee and {=0.01*100}% interest. K-Roo Ltd. has a 7% discount rate and will make its debt payments on an annual basis. What are the present values of each loan offering? O a. The NPV of ANZ's loan is 3.6343 million, the NPV of Westpac's loan is 4.7077 million. O b. The NPV of ANZ's loan is 3.4743 million, the NPV of Westpac's loan is 4.7077 million. O c. The NPV of ANZ's loan is 3.0807 million, the NPV of Westpac's loan is 3.0807 million. O d. The NPV of ANZ's loan is 3.6606 million, the NPV of Westpac's loan is 3.0807 million. O e. The NPV of ANZ's loan is 3.9510 million, the NPV of Westpac's loan is 5.1335 million.
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