Question
Question You are the CFO of a relatively small firm wishing to borrow 500,000 euros for an expansion project you plan to execute in France.
Question
You are the CFO of a relatively small firm wishing to borrow 500,000 euros for an expansion project you plan to execute in France. This project is expected to take 6 months to complete, at which time your firm will repay the 500,000 euros plus the expected interest rate of 4% annually. Your firms USA marginal tax rate is 35%. The current exchange rate is $1.08/ and the 6 month spot rate is $1.11/. Determine the cost of this loan (in US$ ) after taxes as a percentage.
Please show all calculations
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Financial Institutions Management A Risk Management Approach
Authors: Anthony Saunders, Marcia Millon Cornett
9th edition
1259717771, 1259717772, 9781260048186, 1260048187, 978-1259717772
