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Morning Star Air (China). Moming Star Ar, hoadquartered in Kunming. China, needs US$25,000,000 for one year to finance working capital, The airine has pro allematres

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Morning Star Air (China). Moming Star Ar, hoadquartered in Kunming. China, needs US\$25,000,000 for one year to finance working capital, The airine has pro allematres for borrowing: a. Borrow Us\$25,000,000 in Eutodollars in London at 7.45% per annum b. Bocrow HKS198,472, 500 in Hong Kong at 7.15\% per annum, and exchange these Hong Kong dollan at the prusent exchange rate of HKS7 .9389US\$ for U, dotan. A what ensing exchange rate would Moming Star Air be indifferant between borrowing U.S. dollars and bortowing Hong Kong dollars? Moming Star Ar would be indifferemt tetween borrowing U.S. doliars and borrowing Hong Kong dolan if the onding exchange rate is fecs fuSs, (Round io pur decimai phacen.)

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