{[ promptMessage ]}

Bookmark it

{[ promptMessage ]}

Solutions_ch14

# Solutions_ch14 - Problem 14.1 Andina S.A From which source...

This preview shows pages 1–4. Sign up to view the full content.

Problem 14.1 Andina, S.A. From which source should Andina borrow? Assumptions Values Principal borrowing need \$8,000,000 Maturity needed, in weeks 8 Rate of interest charged by ALL potential lenders 4.000% New York interest rate practices Interest calculation uses: Exact number of days in period 56 Number of days in financial year 360 So the interest charge on this principal is \$49,777.78 Great Britain interest rate practices Interest calculation uses: Exact number of days in period 56 Number of days in financial year 365 So the interest charge on this principal is \$49,095.89 Swiss interest rate practices Interest calculation uses: Assumed 30 days per month for two months 60 Number of days in financial year 360 So the interest charge on this principal is \$53,333.33 Andina should borrow in Great Britain because it has the lowest interest cost.

This preview has intentionally blurred sections. Sign up to view the full version.

View Full Document