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What will be cost of borrowing in USD

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Reference no: EM131919788

EXXONM is a MNC Oil company. It has expanded its operation in Thailand and considering raising debt in local currency. The following information is available for the analysts:

Length of loan is for 3 years.

Principal to be borrowed is Thai Bhat 50,000,000.

The interest rate on the loan is 3.0%.

At present the THB/USD exchange rate is 32.58

For the each of next three years it is expected that the THB currency will depreciate 1% against USD.

Based on these information the CFO wants to know what will be cost of borrowing in USD.

Reference no: EM131919788

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