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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

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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