User Account

All Pages

What might be the effective cost of funds in baht terms

Assignment Help Accounting Basics
Reference no: EM132821944

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 $251,000. The current spot rate is B32.07/$, and the dollar-based interest is 6.74% for the 1-year period. 1-year loans are 11.98% in baht.

Assuming expected inflation rates for the coming year of 4.3% and 1.21% in Thailand and the United States, respectively, according to purchase power parity, what would be the effective cost of funds in Thai 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 year (to promote its export competitiveness in dollar markets), what might be the effective cost of funds in baht terms?

If EAC could borrow Thai baht at 13.00% per annum, would this be cheaper than either part  or part?

Reference no: EM132821944

Questions Cloud

Conflict between the company and the union : Discuss on how are you going to resolve the conflict between the company and the union.
Workforce and succession planning in an organization : What problems are demographic shifts, diversity shifts, furloughs, and layoff practices causing Workforce and Succession Planning in an organization?
What are the three best ways to overcome buyer resistance : Do you agree or disagree? Based on the chapter content, what do you think are the three best ways to overcome buyer resistance?
Dimension in management of an organization : Human Resource Management (HRM) is concerned with the peoples dimension in management of an organization.
What might be the effective cost of funds in baht terms : Assuming expected inflation rates for the coming year of 4.3% and 1.21% in Thailand and the United States, What might be the effective cost of funds in baht
Describe the relationship between gwen and the therapist : What were your thoughts about the quality of the relationship between Gwen and the therapist? What specific things did you notice that the therapist.
Most common reasons why employees join unions : Assume you heard rumors of organizing efforts in the breakroom. As an HR manager, what union prevention strategies would you recommend to management? Why?
What is and give examples of sales resistance : Why would you say it is important to anticipate and overcome buyer concerns and resistance. What is and give examples of sales resistance?
Explain the role of communication in critical thinking : Explain the role of communication in critical thinking and provide an example of a time when and how language or communication influenced your critical thinking

Reviews

Write a Review

Accounting Basics Questions & Answers

  How much control does fed have over this longer real rate

Hubbard argues that the Fed can control the Fed funds rate, but the interest rate that is important for the economy is a longer-term real rate of interest.   How much control does the Fed have over this longer real rate?

  Coures:- fundamental accounting principles

Coures:- Fundamental Accounting Principles: - Explain the goals and uses of special journals.

  Accounting problems

Accounting problems,  Draw a detailed timeline incorporating the dividends, calculate    the exact Payback Period  b)   the discounted Payback Period. the IRR,  the NPV, the Profitability Index.

  Theory of interest - term structure of interest rates

Term Structure of Interest Rates

  Write a report on internal controls

Write a report on Internal Controls

  Prepare the bank reconciliation for company

Prepare the bank reconciliation for company.

  Cost-benefit analysis

Create a cost-benefit analysis to evaluate the project

  Theory of interest

Theory of Interest: NPV, IRR, Nominal and Real, Amortization, Sinking Fund, TWRR, DWRR

  Liquidity and profitability

Distinguish between liquidity and profitability.

  What is the expected risk premium on the portfolio

Your Corp, Inc. has a corporate tax rate of 35%. Please calculate their after tax cost of debt expressed as a percentage. Your Corp, Inc. has several outstanding bond issues all of which require semiannual interest payments.

  Simple interest and compound interest

Simple Interest, Compound interest, discount rate, force of interest, AV, PV

  Capm and venture capital

CAPM and Venture Capital

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!

Submit Assignment

Academics

Major Subjects

Majors

Get In Touch

whatsapp: +91-977-207-8620

Phone: +91-977-207-8620

Email: [email protected]

TERMS & POLICIES

HELP & SUPPORT

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