The United States Multinational subsidiary company located in Malaysia could borrow 1-year short-term financing in Malaysia...
Fantastic news! We've Found the answer you've been seeking!
Question:
Transcribed Image Text:
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? 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?
Expert Answer:
Answer rating: 100% (QA)
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... View the full answer
Related Book For
Cost management a strategic approach
ISBN: 978-0073526942
5th edition
Authors: Edward J. Blocher, David E. Stout, Gary Cokins
Posted Date:
Students also viewed these finance questions
-
Assume that U.S. and Argentine investors require a real return of 2 percent. If the U.S. nominal interest rate is 5 percent, and Argentina's nominal interest rate is 7 percent, then according to the...
-
1. Assume that U.S. and Argentine investors require a real return of 2 percent. If the U.S. nominal interest rate is 5 percent, and Argentina's nominal interest rate is 7 percent, then according to...
-
Managing Scope Changes Case Study Scope changes on a project can occur regardless of how well the project is planned or executed. Scope changes can be the result of something that was omitted during...
-
In Problem 12.4 on page 423, you used the percentage of alcohol to predict wine quality. The data are stored in VinhoVerde. From the results of that problem, b 1 = 0.5624 and Sb 1 = 0.1127. a. At the...
-
Given your answer to Problem 17, what effect would you expect an announcement of a share repurchase to have on the stock price? Why?
-
Explain, in terms of linear approximations or differentials, why the approximation is reasonable. 1/9.98 0.1002
-
What is validation, what is its primary objective, and what constitutes Validation success?
-
Bexar Companys fixed overhead costs for the year are expected to be as follows: depreciation, $80,000; supervisory salaries, $90,000; property taxes and insurance, $25,000; and other fixed overhead,...
-
We obtain monthly data on retail sales of supermarket and grocery stores in Victoria measured in millions of Australian dollars from January 2010 to January 2021 and the data are plotted in the...
-
Knowing that the tension in wire BD is 300 lb, determine the reaction at fixed support C for the frame shown. 180 Ib 6 in. 10 in. -20 in. 100 lb 24 in. 16 in.
-
Explain why some non-lawyers have a limited license to engage in what would otherwise be considered the unauthorized practice of law.
-
Is it ethical for a student team to substantially revise a report from a team that wrote about the same topic during the previous semester? What does your school say about such a practice?
-
Identify which organizational strategy you would use for the following messages: direct or indirect. a. A message from a car insurance company that it will no longer insure family members who drive...
-
Read the following and answer the questions below. The costs of hosting the Olympic Games During Olympic years there is a tangible sense of anticipation for many people who enjoy watching or...
-
If an employer requests a rsum, should you also include a cover letter even though the employer didnt specifically ask for one? Explain.
-
Research a geographic area where you would like to work. Investigate the cost of living, industrial growth in the area, weather and climate, and attractions in the area you could visit. The local...
-
Recall "Mini Case 4: Nike's Core Competency: The Risky Business of Creating Heroes." The case discusses the risks associated with using celebrity athletes in marketing. Discuss another company that...
-
The population of Detroit, Michigan, decreased from 1,027,974 in 1990 to 688,701 in 2013 (Source: U.S. Census Bureau). Find the average rate of change in the population of Detroit, Michigan, over the...
-
Porter Company manufactures its one product by a process that requires two departments. The production starts in department A and is completed in department B. Materials are added at the beginning of...
-
Textron Manufacturing Inc. assembles industrial testing instruments in two departments, assembly and testing. Operating data for 2009 and 2010 follow: 2010 2009 Assembly department Actual direct...
-
Williams Manufacturing uses scrap metal to produce various tools, such as drill bits, hammer heads, saw blades, and nails. The CEO has asked you to analyze the saw blades division to determine asset...
-
Consider the binary variable version of the fixed effects model in Equation (10.11) except with an additional regressor, \(D 1_{i}\); that is, let \[ Y_{i t}=\beta_{0}+\beta_{1} X_{i t}+\gamma_{1} D...
-
Using the regression in Equation (10.11), what are the slope and intercept for a. Entity 1 in time period 1? b. Entity 1 in time period 3? c. Entity 3 in time period 1? d. Entity 3 in time period 3?...
-
Do the fixed effects regression assumptions in Key Concept 10.3 imply that \(\operatorname{cov}\left(\widetilde{v}_{i t}, \widetilde{v}_{i s} ight)=0\) for \(t eq s\) in Equation (10.28)? Explain....
Study smarter with the SolutionInn App