What might be the effective cost of funds in baht terms

Assignment Help Management Theories
Reference no: EM131676668

Question: East Asiatic Company-Thailand. The East Asiatic Company (EAC), a Danish company with subsidiaries throughout Asia, has been funding its Bangkok subsidiary primarily with U.S. dollar debt because of the cost and availability of dollar capital as opposed to Thai baht-denominated (B) debt. The treasurer of EAC-Thailand is considering a 1-year bank loan for $250,000. The current spot rate is B32.06/$, and the dollar-based interest is 6.75% for the 1-year period. 1-year loans are 12.00% in baht.

a. Assuming expected inflation rates for the coming year of 4.3% and 1.25% in Thailand and the United States, respectively, according to purchase power parity, what would be the effective cost of funds in Thai baht terms?

b. If EAC's foreign exchange advisers believe strongly that the Thai government wants to push the value of the baht down against the dollar by 5% over the coming year (to promote its export competitiveness in dollar markets), what might be the effective cost of funds in baht terms?

c. If EAC could borrow Thai baht at 13% per annum, would this be cheaper than either part (a) or part (b)?

Reference no: EM131676668

Questions Cloud

Discuss famously broke from the radical white abolitionists : Frederick Douglass reached when he famously broke from the radical white abolitionists with whom he'd begun his political life
What should you budget as the us dollar cost of week rental : Chamonix Chateau Rentals. You are planning a ski vacation to Mt. Blanc in Chamonix, France, one year from now. You are negotiating the rental of a chateau.
What is the cost of obtaining financing with a sale : a. How much would the corporation receive from a sale-leaseback of the property? b. What is the cost of obtaining financing with a sale-leaseback?
Measures aids operations in meeting financial goals : Write just the body of an executive summary trying to include as much of the following information as possible.
What might be the effective cost of funds in baht terms : If EAC's foreign exchange advisers believe strongly that the Thai government wants to push the value of the baht down against the dollar by 5% over the coming.
Who actively negotiating with maltese government on purchase : Maltese Falcon. Imagine that the mythical solid gold falcon, initially intended as a tribute by the Knights of Malta to the King of Spain in appreciation.
Which personal shortcomings or possible failures concern : discuss your own concerns and fears about your career field I am going for nursing. Are you afraid you won't succeed
Evaluating the new technology : What types of non-financial factors TPM must also consider when evaluating the new technology.
Evaluating a interesting opportunity in malaysia : Malaysian Risk. Clayton Moore is the manager of an international money market fund managed out of London. Unlike many money funds that guarantee.

Reviews

Write a Review

Management Theories Questions & Answers

  Learning in action

Learning contract proposal that will form the basis of your learning contract report.

  Change is the only constant

"Change is the only constant " Evaluate the different types of change that have occurred in Sony.

  How do advertisers try to use group influence

How do advertisers try to use group influence?  Will you find any specific examples and explain the relevant theory of group behavior and influence?

  Case study:saving sony

You have been appointed by Sony as a consultant on change management. Advise Sony on how they could implement the change by using the various theories of change you have learnt.

  How the stock market works

The purpose of this project is to help you to gain an understanding of how the stock market works and of the relationship between theory and practice.

  Find the optimal production quantities

Find not only the optimal production quantities, but also the optimal total cost.

  Describe the management process

Describe the management process and identify the skills required to manage business organizations.

  Case study : bert''s bonsai and aquatic sport museum

Case Study : Bert's Bonsai and Aquatic Sport Museum Prepare a knowledge management system.

  Knowledge management techniques

Demonstrate understanding of the many-sided nature of knowledge management

  Theory of transtheoretical model

Demonstrate understanding of the many-sided nature of knowledge management

  Write a paper on historical trends of management

Write a paper on Historical Trends of Management.

  Theory of reasoned action

Theory of Planned Behavior and Integrated Behaviors Model

Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd