ABC CorpEntered into a Currency Swap with Its Bank,providing That ABC

question 53

Multiple Choice

ABC Corp.entered into a currency swap with its bank,providing that ABC borrows $5 million at 10% and swaps for a 12% yen loan.The spot exchange rate is *105/$.If interest only is to be repaid on an annual basis,how much does ABC pay annually to the bank?

• A) "*1.26 million"
• B) "*105.71 million"
• C) "*52.50 million"
• D) "*63.00 million"

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Definitions:

Asset's Life

The estimated duration over which an asset is expected to be useful in a business before it requires replacement.

Insufficient Capacity

A situation where a firm cannot meet the demand for its products or services due to limitations in its production or service capabilities.

Plant Asset

Long-term tangible assets used in the production and sale of goods and services, such as machinery and buildings.

Productive Demands

The requirement for goods and services based on their use in producing other goods and services.