● ● ● Question Chapter 14 Inter-KSA is a Saudi Arabian airline company specializing in internal flights that needs €50,000,000 for one year to finance working capital. The airline firm has two alternatives for borrowing: a. Borrow €50,000,000 in Paris at 7% per annum b. Borrow Saudi Riyals SAR 225,000,000 in Saudi Arabia at 9% per annum and then exchange the riyals at the cross rate of 1 EUR = 4.5 SAR. c. At what ending exchange rate would Inter-KSA be indifferent between borrowing euros and borrowing Saudi riyals?

● ● ● Question Chapter 14 Inter-KSA is a Saudi Arabian airline company specializing in internal flights that needs €50,000,000 for one year to finance working capital. The airline firm has two alternatives for borrowing: a. Borrow €50,000,000 in Paris at 7% per annum b. Borrow Saudi Riyals SAR 225,000,000 in Saudi Arabia at 9% per annum and then exchange the riyals at the cross rate of 1 EUR = 4.5 SAR. c. At what ending exchange rate would Inter-KSA be indifferent between borrowing euros and borrowing Saudi riyals?

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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