Question

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/euro at the time the loan was made to ​$1.35/euro at the end of the first​ year, how much interest will TropiKana pay at the end of the first year​ (rounded)?

Answer 1

Answer:

$74,250  

Explanation:

The computation of interest pay at the end of the first year is given below:-

Interest pay at the end of the first year = Borrowed Euro × Euro at the time of loan × Interest rate per year

= 1,000,000 euro × $1.35/euro × 5.50%

= $74,250  

Therefore for computing the interest pay at the end of the first year we simply multiplied the borrowed euro, euro at the time of loan and interest rate per year.