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yanalaym [24]
1 year ago
10

3. A U.S. MNC needs to raise capital of $100 million by issuing bonds. The firm can either raise US$ at 5% interest rate or issu

e foreign bond in Germany denominated in Euro at 6%. The Euro is expected to depreciate by 2% in the following year. What is the best alternative and how much is the effective dollar cost
Business
1 answer:
Y_Kistochka [10]1 year ago
7 0

1. The best alternative for raising $100 million in bonds is <u>B. Borrow Euro.</u>

2. The effective dollar cost of the U.S. MNC is <u>B</u><u>. approximately </u><u>5%.</u>

<h3>What is the effect of borrowing the Euro?</h3>

If the U.S. multinational company (MNC) borrows the $100 million by issuing Euro bonds, it will cost it $5 million annually but it will gain from the depreciation of the Euro by 2%.

The depreciation of the Euro reduces the effective interest rate of 6% for borrowing in the Euro to <u>4%</u> (6% - 2%).

<h3>Answer Options:</h3>

A. Borrow dollars and the effective dollar cost is approximately 4%.

B. Borrow Euro and the effective dollar cost is approximately 5%.

C. Borrow Euro and the effective dollar cost is approximately 7%.

D. Borrow dollars and the effective dollar cost is approximately 5%.

Thus, the best alternative and the effective dollar cost of the U.S. MNC raising capital of $100 million through the issuance of bonds is <u>B. Borrow Euro and the effective dollar cost</u> is approximately <u>5%</u><u>.</u>

Learn more about foreign bonds at brainly.com/question/26271508

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Explanation:

This can be an interesting idea to start entrepreneurship, since starting a pet sitter service just requires liking animals and publicizing the service, which can be done for free through social media. I believe this is a good opportunity to learn more about managing your own business, meeting a new network of people and understanding the service market, as well as being a source of extra income.

Entrepreneurship is all about identifying people's needs and turning them into products and services that can be profitable, in addition to being a great tool to assist in the development of individual skills, market knowledge, innovation capacity, etc.

4 0
3 years ago
Aragon Company has just received the August 21, 2010 bank statement, which is summarized below.
Nina [5.8K]

Answer:

Complete solution in tabular form is given below for better understanding and demonstration.

7 0
3 years ago
2. If the government decided to subsidize the production of a good, the result would be a decrease in the equilibrium price and
kogti [31]

Answer: True

Explanation:

The subsidy will increase the supply of the good, and therefore the supply curve will shift to the right. Then its intersection with the demand curve will be located at a lower price and with a larger quantity.

5 0
3 years ago
Which of the following allows the insurer to relieve a minor insured from premium payments if the minor's parents have died or b
loris [4]

Answer:

The correct answer is a) Payor Benefit

Explanation:

When the payor dies or becomes disabled, the insurer will suspend the premiums until the child reaches 19 years old, the child must be under age 18, or up to age 19 and still attending high school. Usually, the payor is a parent (father, mother, brothers).

4 0
2 years ago
Tracy Company, a manufacturer of air conditioners, sold 270 units to Thomas Company on November 17, 2021. The units have a list
coldgirl [10]

Answer:

November 17, 2021

Dr. Inventory              $81,000

Cr. Account payable $81,000

November 26, 2021

Dr. Account Payable $81,000

Cr. Discount Income $2,430

Cr. Cash                     $78,570

December 15, 2021

Dr. Account payable $81,000

Cr. Cash                     $81,000

Explanation:

Sales Amount = 270 units x $400 = $108,000

Discount = $108,00 x 25% = $27,000

Net Sales = $108,000 - $27,000 = $81,000

Terms of sale 3/10, n/30 means there is a discount of 3% is available on payment of due amount within discount period of 10 days after sale with net credit period of 30 days.

Payment made on

November 26, 2021

As the payment is made within discount period, so discount will be availed

Discount = $81,000 x 3% = $2,430

Cash received = $81,000 - $2,430 = $78,570

December 15, 2021

As the payment is made after discount period, so no discount will be availed.  Full payment of $81,000 will be made.

3 0
3 years ago
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