RUMI Berbad, a Malaysian company located in the United States decided either to borrow in a...
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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 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. 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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Related Book For
International Financial Management
ISBN: 978-0132162760
2nd edition
Authors: Geert Bekaert, Robert J. Hodrick
Posted Date:
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