AboutBrian Thompson Expertise My expertise extends to general management, financial management, corporate govenance and everyday managerial problem solving
Experience I have in excess of 30 years experience in the management of public and private organisations
Question not an homework question
Subject Name: Treasury Management please suggest me on this matter
Case study: An Indian company is planning to invest $100 million in USA. The return on investment is expected to be 50%. The spot rate is Rs45 per $. One year forward rate is Rs46.00 per $. The company can access rupee funds in India at 15%. An American Bank has offered to supply $100 million at a rate of Rs44 per $ and swap the same amount at Rs44 per $ after one year. The bank will charge Interest at 10 % on the loan. Explain whether the company should accept the bank’s offer. Assume that there is no restriction for repatriation of funds in both dollars and rupees.
Answer my answer to you is this hyperthetical is undoubtedly an assignment question and the answer will be apparent if you do all the calculations necessary and determine what the cost of the alternatives might be.
The Bank has taken the currency risk and offered a lower interest rate it is surely a no brainer as we say here, the best alternative is immediately apparent
