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MP) and one in Japan (local currency, yen, ). Forecasts of business Next Question Euromarket investment and fund raising A U.S.-based multinational company has two
MP) and one in Japan (local currency, yen, ). Forecasts of business Next Question Euromarket investment and fund raising A U.S.-based multinational company has two subsidiaries, one in Mexico (local curre operations indicate the following short-term financing position for each subsidiary (in equivalent U.S. dollars): Mexico: $81 million excess cash to be invested (lent) Japan: $64 million funds to be raised (borrowed) The management gathered the following data: Determine the effective interest rates for all three currencies in both the Euromarket and the domestic market; then indicate where the funds should be invested and raised. (Note: Assume that because of local regulations, a subsidiary is not permitted to use the domestic market of any other subsidiary.) The effective interest rate in the Euromarket for the USS is %. (Round to two decimal places.) Data Table order to copy its contents (Click on the icon located on the top-right comer of the data table below into a spreadsheet.) US $ Currency MP MP11.58/USS -2.98% 107.82/US$ +1.49% Item Spot exchange rates Forecast percentage change Interest rates Nominal Euromarket Domestic Effective Euromarket Domestic 4.02% 3.71% 6.18% 5.94% 1.95% 2.17%
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