Question
RUMI Berbad, a Malaysian company located in the United States decided either to borrow in a foreign currency or a local currency. The following
RUMI Berbad, a Malaysian company located in the United States decided either to borrow in a foreign currency or a local currency. The following information is given for your analysis: Spot rate One-year rate forecast Interest rate per annum Malaysia United States Corporate tax per annum RM4.3500/USD + 3.0 percent 5% 7% 30.0 percent 1. Determine the before-tax home cost of borrowing USD. 2. Determine the after-tax home cost of borrowing USD and MYR. (4 marks) (6 marks) 3. Calculate the exchange rate that would make the company be indifferent between borrowing in Malaysia and in US.
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International Financial Management
Authors: Geert Bekaert, Robert J. Hodrick
2nd edition
013299755X, 132162768, 9780132997553, 978-0132162760
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