Fixed-rate borrowing costs to general electric

Assignment Help Financial Management
Reference no: EM132045908

Suppose the five-year fixed-rate borrowing costs to General Electric and Qantas Airways in U.S. dollars (USD) and Australian dollars (AUD) have been quoted the following rates per annum (adjusted for differential tax effects):

USD AUD

General Electric 5.0% 7.6%

Qantas Airways 7.0% 8.0%

Design a currency swap that will make all parties involved (bank, two companies) attractive assuming that General Electric wants to borrow 20 million AUD and Qantas Airways wants to borrow 15 million USD and the current exchange rate (USD per AUD) is 0.75.

Reference no: EM132045908

Questions Cloud

What is the operating cash flow for this project : The annual depreciation is $10,000. The applicable tax rate is 30%. What is the operating cash flow for this project?
Explain two challenges valuers experience : Explain two challenges valuers experience when valuing private companied like Nomad. Estimated the enterprise value for Nomad Limited.
What is the initial cost of the investment : This week, the company is trying to decide if the machine can be better utilized if they assigned it a proposed project. What is the initial cost of investment
Job to get mba be smart financial decision : If his real opportunity cost is 10 percent, would leaving his job to get an MBA be a smart financial decision?
Fixed-rate borrowing costs to general electric : Suppose the five-year fixed-rate borrowing costs to General Electric and Qantas Airways in U.S. dollars (USD) and Australian dollars (AUD)
Flotation rate of interest linked to six-month libor : Whereas AAACorp wants to borrow at a flotation rate of interest linked to six-month LIBOR.
Discuss four factors that derive value of corporations : List and discuss four factors that derive value of corporations.
Using money-market hedge to protect : GM us using a money-market hedge to protect an LM 200 million payable due in one year.
Calculate the amount of principal repaid in seventh payment : The annual effective interest rate for the loan is 6% Calculate the amount of principal repaid in the seventh payment.

Reviews

Write a Review

Financial Management Questions & Answers

  Paid to acquire new medium size business customer

What is the maximum amount that should be paid to acquire a new ‘Medium Size Business’ customer?

  What is the connection of a stock to market risk

What is the connection of a stock to market risk? Define and provide the formula to determine a stock’s market risk. What's the difference between simple interest and discount method? Write in table format. What's the difference between effective and..

  Diligently saving to buy boat

You have been diligently saving to buy a boat. For the last 10 years, you have been putting $50 per month into a secret savings account paying .5% interest per year. You started with $0. You just discovered that your spouse knew about the account the..

  Bond outstanding with coupon rate

Union Local School District has a bond outstanding with a coupon rate of 8.09 percent paid semiannually and 5 year to maturity. The yield to maturity on this bond is 8.92 percent, and the bond has a par value of $5,000. What is the price of the bond?

  What is the estimated value per share of your firm stock

What is the required rate of return on your company’s stock? What is the estimated value per share of your firm’s stock?

  What amount will be released on net basis

What amount will be released on a net basis if each local bank requires an increase in compensating balances of $15,000 to offset the loss of float?

  Calculate the best-case and worst-case npv figures

Calculate the best-case and worst-case NPV figures.

  What is the project year one net cash flow

What is the project's year 0 net cash flow? What is the project's year 1 net cash flow?

  How many tons of gravel-sand should be purchased each day

The Sureset Concrete Company produces concrete. Two ingredients in concrete are sand (costs $6 per ton) and gravel (costs $8 per ton). Sand and gravel together must make up exactly 75% of the weight of the concrete. Also, no more than 40% of the conc..

  Difference between project and parent valuation

How to company's value a foreign project? What is the difference between Project and Parent valuation.

  Calculate the break-even price for the investor

An investor has protective put position that consists of one long put option and one share of underlying stock. Calculate the break-even price for the investor.

  Capital investment decisions or capital budgeting decisions

Explain and discuss different methods for capital investment decisions or capital budgeting decisions criteria.

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