Question
Please can someone help with this and show workings so I can understand where the inflations are added. The research department of a large financial
Please can someone help with this and show workings so I can understand where the inflations are added.
The research department of a large financial institution provided inflation expectations for the next five years. According to the forecasts, UK will have 1.75% more inflation than France and 3.5% higher inflation than South Korea. On the basis of this new evidence, would you consider your proposal with regard to financing the Korean factory? Explain your answer.Thankyou in advance.
year | year | year | year | year | year | total payments | ||
0 | 1 | 2 | 3 | 4 | 5 | |||
initial investments (KRW) | 200,000.00 | |||||||
interest rate in uk (5-year loan) | 0.09 | |||||||
interest rate in south korea (5-year loan) | 0.15 | |||||||
interest rate in france (5-year loan) | 0.12 | |||||||
exchange rate: KRW per GBP | 4% per annum | 2,000.00 | 2,000.00 | 2,080.00 | 2,163.20 | 2,249.73 | 2,339.72 | 2,433.31 |
forecasted exchange rate: EUR per GBP | 3% per annum | 1.18 | 1.18 | 1.22 | 1.26 | 1.30 | 1.34 | 1.38 |
korean debt in millions KRW | IR 0.15 | 200,000.00 | 200,000.00 | 230,000.00 | 264,500.00 | 304,175.00 | 349,801.25 | 402,271.44 |
UK debt in millions GBP | IR 0.09 | 100.00 | 100.00 | 109.00 | 118.81 | 129.50 | 141.16 | 153.86 |
French debt in millions EUR | IR 0.12 | 118.00 | 118.00 | 132.16 | 148.02 | 165.78 | 185.67 | 207.95 |
GBP converted to KRW | 218,000.00 | 237,620.00 | 259,000.00 | 282,320.00 | 307,720.00 | 307,720.00 | ||
EUR converted to KRW | 264,320.00 | 296,040.00 | 331,560.00 | 371,340.00 | 415,900.00 | 415,900.00 | ||
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