What is the gain or loss in us dollars

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Reference no: EM132977777

Question: BII Banking can borrow $7.million at an interest rate of 5% a year.

The company can use the funds to invest in Canadian dollars for 8 days which will yield a return of 10% a year. The Canadian dollar is now worth $1.95 and is expected to be worth $1.94 8 days later. Based on this information, is it appropriate for BII Banking to borrow US dollars and invest in Canadian dollars? If so, what is the gain or loss in US dollars?

Reference no: EM132977777

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