What is your expected profit after repaying the loan

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Reference no: EM132038431

You work for the Bank. Your bank has received a $400 million dollar loan to be repaid in dollars after one year at 5% interest to the creditor lending your bank the dollars. You are going to divide that up into smaller loans but we will consider this here as one loan and not worry about taking out the default risk (failure to repay) of some of the borrowers. You will charge another 5% interest on your bank. So, what is your expected profit after repaying the loan? If the initial exchange rate is 100 Baht to the dollar.

Reference no: EM132038431

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