TropiKana Inc

question 35

Multiple Choice

TropiKana Inc., a U.S firm, has just borrowed euro 1,000,000 to make improvements to an Italian fruit plantation and processing plant. If the interest rate is 5.50% per year and the Euro depreciates against the dollar from $1.40/€ at the time the loan was made to $1.35/€ at the end of the first year, how much interest and principle will TropiKana pay at the end of the first year if they repay the entire loan plus interest (rounded) ?

• A) $1,477,000
• B) $1,055,000
• C) €1,424,250
• D) $1,424,250

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Definitions:

Annealing Furnaces

High-temperature ovens used in manufacturing to heat materials like metals, allowing them to cool slowly in order to reduce hardness, increase ductility, and relieve internal stresses.

Forward-bias

A condition in which a diode allows current to flow more easily, achieved by applying positive voltage to the anode relative to the cathode.