Problema swiss bank converted 1 million swiss francs to, Ask an Expert

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Problem:

A Swiss bank converted 1 million Swiss francs to euros to make a euro loan to a customer when the exchange rate was 1.85 francs per euro. The borrower agreed to repay the principle plus 3.75% interest in 1 year. The borrower repaid euros at loan maturity and when the loan was repaid the exchange rate was 1.98 francs per dollar.

Required:

Question: What was the bank's franc rate of return?

-2.82%
9.94%
5.71%
7.75%
11.04%

Note: Please explain comprehensively and give step by step solution.

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Accounting Basics, Accounting

Category:- Accounting Basics
Reference No.:- M91170409

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