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A U.S. company is considering borrowing 500,000 from a spanish bank to partially finance a project. The discounted load will likely be made when the spot rate is $1.38. They will repay the bank 750,000 in 5 years. There will beno other interest or principal payments. Calculate the loan's effective interest rate (i.e., from the point of view of the borrower) if the company projects the exchange rate will be $1.25 five years from now.

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Financial Management, Finance

Category:- Financial Management
Reference No.:- M92368942

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