US - based MNC borrows 1 0 0 million CAD for a year from a Canadian bank

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Question:

-

based MNC borrows

100

million CAD for a year from a Canadian bank that charges

6.5 %

annual interest rate. The exchange rate today is

1

CAD

=

0.73 .

Assume that the exchange rate becomes

1

CAD

=

0.71

in a year. What is the effective interest rate of the loan?

Posted Date: May 11, 2024 05:20 AM

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US - based MNC borrows 1 0 0 million CAD for a year from a Canadian bank

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To calculate the effective interest rate of the loan we need to consider the exchange rate change ov... View the full answer

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