Required:

Zeda Incorporated, a U$.$S$.$ MNC$,$ is considering making a fixed direct investment in

Denmark. The Danish government has offered Zeda a concessionary loan of

DKK$15,000,000$ at a rate of $4$ percent per annum. The normal borrowing rate is $6$

percent in dollars and $5\mathrm{.}5$ percent in Danish krone. The loan schedule calls for the

principal to be repaid in three equal annual installments. What is the present value

of the benefit of the concessionary loan? The current spot rate is DKK$5\mathrm{.}60$ per

$$1\mathrm{.}00$ and the expected inflation rate is $3$ percent in the United States and $2\mathrm{.}5$

percent in Denmark.

Note: Round the exchange rates to two decimal places. Round the intermediate

calculations and final answer to nearest whole number.

Present value of the benefit of the concessionary loan