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How will this affect the original proposal of borrowing fund

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Question - You are requiring an investment of 1,000,000 KRW which on the bases of exchange rates and appreciation it is proven more beneficial to borrow the funds for the investment in GBP as it will save the organisation some money.

However now there is going to a 3% inflation difference where GBP will have 3% more inflation than KRW.

How will this affect the original proposal of borrowing funds from the UK? Does the 3% inflation only affect selling/buying in terms of commodity or will this affect how much the lender will have to pay back on the investment? If inflation is rising can we assume that the interest rates may fall? Is purchasing power parity relevant?

Reference no: EM133146285

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