Assume you are in India and borrowed 800,000 Rs from one of your friends who lives in Australia. Suppose the spot exchange rate at the time borrowing was Rs63/$ and you promised to repay the loan after six months with a forward currency rate of Rs68/$ without any interest. Required: b) If you are planning to settle the loan amount in dollars (the amount calculated in a.), what is the amount of money in rupees (Rs) that you need to pay to an authorised currency exchanger in India after six months with a Rs 500 administration fee? c) What is the total cost of your loan and present your answer as a rate of interest per annum
Assume you are in India and borrowed 800,000 Rs from one of your friends who lives in Australia. Suppose the spot exchange rate at the time borrowing was Rs63/$ and you promised to repay the loan after six months with a forward currency rate of Rs68/$ without any interest. Required: b) If you are planning to settle the loan amount in dollars (the amount calculated in a.), what is the amount of money in rupees (Rs) that you need to pay to an authorised currency exchanger in India after six months with a Rs 500 administration fee? c) What is the total cost of your loan and present your answer as a rate of interest per annum
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
Related questions
Question
Assume you are in India and borrowed 800,000 Rs from one of your friends who lives in Australia. Suppose the spot exchange rate at the time borrowing was Rs63/$ and you promised to repay the loan after six months with a forward currency rate of Rs68/$ without any interest.
Required:
b) If you are planning to settle the loan amount in dollars (the amount calculated in a.), what is the amount of money in rupees (Rs) that you need to pay to an authorised currency exchanger in India after six months with a Rs 500 administration fee?
c) What is the total cost of your loan and present your answer as a rate of interest per annum
Expert Solution
Step 1
Step by step
Solved in 2 steps with 2 images
Recommended textbooks for you
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
Horngren's Cost Accounting: A Managerial Emphasis…
Accounting
ISBN:
9780134475585
Author:
Srikant M. Datar, Madhav V. Rajan
Publisher:
PEARSON
Intermediate Accounting
Accounting
ISBN:
9781259722660
Author:
J. David Spiceland, Mark W. Nelson, Wayne M Thomas
Publisher:
McGraw-Hill Education
Financial and Managerial Accounting
Accounting
ISBN:
9781259726705
Author:
John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting Principles
Publisher:
McGraw-Hill Education