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Problem:

ABC Inc. borrows 100m JPY when JPY spot rate is JPY120/$. The JPY interest rate for the loan is 3%. One year later when ABC pays back the JPY principal and interest, the exchange rate is JPY 95/$.

Required:

What is the dollar cost of ABC's JPY loan? Show your all work and describe in detail.

A. 3%

B. 30.1%

C. -18.46%

D. None of the above

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Basic Finance, Finance

Category:- Basic Finance
Reference No.:- M91145991

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