Debt denominated in a foreign currency

Assignment Help Finance Basics
Reference no: EM132411144

First Atlantic Bank

The bank granted a medium term loan facility of GH¢15,000,000 to the company. The facility is due to expire on August, 2018 and interest rate was 26.47% per annum (subject to review in line with market conditions). The facility is to refinance the company's capital expenditure.

Stanbic Bank Ghana Limited

The Company was granted a Medium Term Loan of USD$5,161,280 by Stanbic Bank Ghana Limited, for general corporate purposes including capital expenditure for new Service Stations and Rebranding exercise. The loan is to be repaid in full over a period of five (5) years with six (6) months moratorium. Interest rate is 6.4% fixed per annum. With respect to security the aggregate of all amounts deemed by the Bank to be outstanding under the facility shall be on an unsecured basis. However, the Bank reserves the right to review the facility from time to time and thereafter call for security should it be considered necessary."

  1. Considering the information above, discuss the risks associated with the dollar-denominated loan and assess additional factors that might influence a company's decision to source debt denominated in a foreign currency?

Reference no: EM132411144

Questions Cloud

Calculate the terminal value of a company : Calculate the terminal value of a company that has an estimated P/E ratio of 9 and forecast net income as follows.
Calculate toronto beverage company pre-money : Calculate Toronto Beverage Company's pre-money valuation (before it receives the investment from Thomas).
The value of a company before it receives : The value of a company before it receives a round of funding is its.
What percentage of the company will gary own : Jamie is going to invest an additional $75,000 into the company. After the investment, what percentage of the company will Gary own?
Debt denominated in a foreign currency : Considering the information above, discuss the risks associated with the dollar-denominated loan and assess additional factors that might influence a company
Extended increasing interest rate environment : When using a portfolio rate, what would cause the portfolio interest rate on a UL to perform better than the market in an extended declining interest rate
Exposure to exchange rate risk : For long term financing which source has less exposure to exchange rate risk, Equity or Debt Financing? Explain.
What is the ytm of the bond today : If Mr. Norton purchases three of these bonds today, how much money will he receive 10 years from today at maturity?
Discuss the requirements that videodev will need : Discuss briefly what you would recommend should be included in VideoDev's BCP as a result of their adoption of a Microservices approach

Reviews

Write a Review

Finance Basics Questions & Answers

  How many years will it take the firm to pay off this debt

Berkley Trucking recently purchased a new truck costing $147,800. The firm financed this purchase at 7.6 percent interest with monthly payments of $2,100. How many years will it take the firm to pay off this debt?

  What would you do if you were mr peters

The banker offers to set up a forward hedge for selling the euro receivable for pound sterling based on the €/£ forward cross-exchange rate implicit in the forward rates against the dollar. What would you do if you were Mr. Peters?

  Determine the payback period for each project

The Sanders Electric Company is evaluating 2 projects for possible inclusion in the firm's capital budget. Project M will require a $37,000 investment while project O"s investment will be $46,000. After-tax cash inflows are estimated follows for t..

  What will the year 1 operating cash flow for this project be

Depreciation is computed using MACRS over a 5-year life, and the cost of capitial is 9 percent. Assume a 40 percent tax rate. What will the year 1 operating cash flow for this project be?

  Describe the main source of funds for credit unions

Describe the main source of funds for credit unions. -  Why might the average cost of funds to CUs be relatively stable even when market interest rates are volatile?

  What is the beta of cliff corp stock

Cliff Corp. stock currently sells for $50 per share and just paid a dividend of $2.00. If dividends are expected to grow at a constant rate of 4% annually.

  Plan to deposit an additional

You have $38,630.60 in a brokerage account, and you plan to deposit an additional $4,000 at the end of every future year until your account totals $200,000. You expect to earn 11% annually on the account.

  What is the target stock price in one year

What is the target stock price in one year? Assuming the company pays no dividends, what is the implied return on the company's stock over the next year?

  What is the firm’s wacc

QUESTION 1Suppose a company will issue new 5-year debt with a face value of $1,000 and a coupon rate of 8 percent, paid annually. If the issuing price is $1080 and the tax rate is 40 percent. What is the after-tax cost of debt? If the expected rate o..

  What is the break-even point in units for the company

Rocky Mount Metals Company manufactures an assortment of wood burning stoves. The average selling price for the various units is $650.

  Calculate expected recurring and non-recurring economic

Explain how you would attempt to calculate expected "recurring" AND "non-recurring" economic benefits to present value for a capital project.

  Degree of operating leverage of modern artifacts

a. What is the degree of operating leverage of Modern Artifacts when sales are $30,800? b. What is the degree of operating leverage when sales are $57,120? c. Why is operating leverage different at these two levels of sales?

Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd