How much has the investor lost in yen terms-in dollar terms

Assignment Help Financial Management

Reference no: EM131490209

In 1989 and 1990, the Japanese company Mitsubishi Estate Co. paid the Rockefeller family $1.4 billion for an 80% stake in New York's Rockefeller center. At the time, the exchange rate was 145 yen/$. When the investor went to sell the building 5 years later, in early 1995, the exchange rate was 85 yen/$ and the property's value had decreased to $800 million.

Assume the purchase was $1.1 billion in total and that the value declines to $450 million. Suppose the investor financed the purchase with a $100 million down payment in yen and a $1 billion loan accumulating interest at the rate of 8% per annum. Since it is a zero-coupon loan, the interest on it (along with the principal) is not due and payable until the building is sold. How much has the investor lost in yen terms? In dollar terms?

Reference no: EM131490209

Questions Cloud

Define the federal budget : In each of the following circumstances, decide whether the impact of goverment on the economy increases or decreases and why.

Is such tax consistent with a mechanistic view of government : Obesity is perceived to be a national health problem in the United States. One suggestion to deal with this problem is a "fat tax." The idea is to levy a tax.

Nominal interest rate and extending credit : As jewelry store manager, you want to offer credit, with interest on outstanding balances paid monthly. What APR rate should you charge your customers?

How you would expect libertatian with an organic conception : Explain how you would expect a libertatian, a social democrat, and someone with an organic con-ception of the state to mars to the following laws.

How much has the investor lost in yen terms-in dollar terms : How much has the investor lost in yen terms? In dollar terms?

Is statements are consistent- an organic or mechanistic view : Indicate whether each of the following statements is consistent with an organic or mechanistic view of government.

Better representation of the costs incurred to produce job : Which approach to assigning overhead gives a better representation of the costs incurred to produce Job 6.15? Explain.

Explain the given statement according to requirement : Explain the following statement: "Retained earnings as reported on the balance do not represent cash and are not available for the payment of dividends.

Result the distribution abby has dividend income : As a result the distribution abby has dividend income

User Account

All Pages