The Following Information Pertains to Questions

question 62

Multiple Choice

The following information pertains to questions
XYZ Corp has a calendar year end.On January 1,2010,the company borrowed $5,000,000 U.S.dollars from an American Bank.The loan is to be repaid on December 31,2013 and requires interest at 5% to be paid every December 31.The loan and applicable interest are both to be repaid in U.S.dollars.XYZ does not hedge to minimize its foreign exchange risk.
The following exchange rates were in effect throughout the term of the loan: The average rates in effect for 2010 and 2011 were as follows:
-What is the amount of interest paid (in Canadian Dollars) during 2010?

• A)$250,000
• B)$372,500
• C)$287,330
• D)$287,250

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Definitions:

Item Value

The worth or utility that a specific item or product holds for an individual or the market.

Ownership

The state or fact of exclusive rights and control over property, which can be an object, land/real estate, or intellectual property.

Reference Point

A baseline or standard used for comparison in financial and economic analysis, often to gauge changes or differences.

Economic Decisions

Economic decisions involve choices about resource allocation, production, distribution, and consumption within an economy, often under conditions of scarcity.