Foreign exchange loss incurred on the? transaction

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Siam? Cement, the? Bangkok-based cement? manufacturer, suffered enormous losses with the coming of the Asian crisis in 1997. The company had been pursuing a very aggressive growth strategy in the? mid-1990s, taking on massive quantities of? foreign-currency-denominated debt? (primarily U.S.? dollars).

When the Thai baht? (B) was devalued from its pegged rate of B25.6?/$ in July? 1997, Siam's interest payments alone were over? $900 million on its outstanding dollar debt?(with an average interest rate of 7.79?% on its U.S. dollar debt at that? time).

Assuming Siam Cement took out $54 million in debt in June 1997 at 7.79?% ?interest, and had to repay it in one year when the spot exchange rate had stabilized at B42.5/$?, what was the foreign exchange loss incurred on the? transaction?

Reference no: EM132790997

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