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The United States Multinational subsidiary company located in Malaysia could borrow 1-year short-term financing in Malaysia at 6% or in United States at 7%.
The United States Multinational subsidiary company located in Malaysia could borrow 1-year short-term financing in Malaysia at 6% or in United States at 7%. The Ringgit: Dollar exchange rate is expected to move from RM3.2020 equal to US$1 to RM3.2200 equal to US$1 by the end of the year. The Malaysian government charges 20% corporate tax for that year. Which currency loan is better option for the subsidiary to borrow and why? What exchange rate that would make the subsidiary be indifferent between borrowing in Malaysia and in US?
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To determine which currency loan is the better option for the subsidiary we need to compare the effective costs of borrowing in Malaysia and the Unite...
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Cost management a strategic approach
Authors: Edward J. Blocher, David E. Stout, Gary Cokins
5th edition
73526940, 978-0073526942
