What might be the effective cost of funds in baht? terms

Reference no: EM133376564

Question: 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 $252,000. The current spot rate is B32.07?/$, and the? dollar-based interest is 6.79?% for the? 1-year period.? 1-year loans are 12.03?% 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 13.00?% per? annum, would this be cheaper than either part a or part b??

Reference no: EM133376564

Questions Cloud

What is your estimate of the current price per share : What is your estimate of the current price per share? Round your answer to two decimal places. Write out your answer completely

Do the results look useful and relevant to your topic : Write down the number of records that you retrieved from the first search. Do the results look useful and relevant to your topic? If so, how, if not, why not?

Why are 40-50% of the population not voting : Why are 40-50% of the population not voting? Is it lack of trust? Do people feel like they cannot make a difference? How do we build a democracy?

What was his continuous rate of return : He converts back to U.S dollars at the rate of exchange. What amount (in U.S dollars) did he make or lose in the one year? What was his continuous rate of retur

What might be the effective cost of funds in baht? terms : FIN 336 Southern New Hampshire University what might be the effective cost of funds in baht? terms? c. If EAC could borrow Thai baht at 13.00?% per? annum

What do all these music videos say to you about post-soviet : What do all these music videos "say" to you about post-Soviet, 21st century Russia? Do you have 1-2 general observations drawing on all of them?

What would you do as a teacher to make these parents more : What would you d0 as a teacher to make these parents more comfortable so that they would be willing and able to help their children with their literacy

Write a summary about the level of customer services : FIN 4003 Lambton College write a summary (facts, analysis, and conclusion) about the level of customer services provided by these bank staff. It is important

How is establishment of power or the journey to possession : Can you please make an argument about the ways in which, and to what extent, power or the right to possession is established or maintained in Genesis.

User Account

All Pages