What is the total cost of loan

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Assume you are in India and borrowed 800,000 Rupees (Rs) from one of your friends who lives in Australia. Suppose the spot exchange rate at the time borrowing was Rs 63/$ and you promised to repay the loan after six months with a forward currency rate of Rs68/$ without any interest.

Required:

a) What is the amount of money in dollars that your friend needs pay to an authorised currency exchanger in Australia with a 20$ administration fee to transfer the loan?

b) If you are planning to settle the loan amount in dollars (the amount calculated in a.), what is the amount of money in rupees (Rs) that you need to pay to an authorised currency exchanger in India after six months with a Rs 500 administration fee?

c) What is the total cost of your loan and present your answer as a rate of interest per annum

Reference no: EM133032731

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