Answer:
23.39%
Explanation:
From the given information, the amount was raised in rubies, Hence, we will convert them to dollars to be able to pay back the needed obligations.
However, according to the exchange rates, the IRR of dollar cash flow is the actual cost of financing that the company will address.
By applying the EXCEL FORMULA to compute the actual cost of financing, we get;
A B C D E
Coupon 17%
Year 0 1 2 3
Cashflow in
rubles 5,000,000 5000000*17% 5000000*17% 5000000+850
= 850000 = 850000 000
= 5850000
Exchange $0.30 $0.032 $0.034 $0.035
rate
(per rubles) 5,000,000 5,000,000 5,000,000 5,000,000
Cash flow × 0.03 × 0.032 × 0.034 × 0.035
in dollars = $150000.00 27200.00 28900.00 204750.00
IRR 23.39%
