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Moming Star Alr (China), Morning Star Air, headquartered in Kunming, China, needs US $20,000,000 for cne year to finance working capital. The airline has two

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Moming Star Alr (China), Morning Star Air, headquartered in Kunming, China, needs US $20,000,000 for cne year to finance working capital. The airline has two attematlyes for borrowing: a. Bortow US\$20,000,000 in Eurodollars in London at 7.45% per annum b. Borrow Hiks156,770,000 in Hong Kong at 7.20% per annum, and exchange these Hong Kong dollars at the present exchange rate of Hiks7 .8385/US5 for U.S. dollars. At what ending exchange tate would Moming Star Air be inditferent between borrowing U.S. dollars and borrowing Hong Kong dollars? Morning Star Air would be indifferent between borrowing U.S. dollars and borrowing Hong Kong dollars if the ending oxchange rate is Hris

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