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Calculate the dollar cost of abc''s jpy loan

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Reference no: EM1340299

ABC Inc. borrows 100m JPY when JPY spot rate is JPY120/$. The JPY interest rate for the loan is 3%. One year later when ABC pays back the JPY principal and interest, the exchange rate is JPY 95/$. What is the dollar cost of ABC's JPY loan?

  1. 3%
  2. 30.1%
  3. -18.46%
  4. None of the above

Reference no: EM1340299

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