East Asiatic Company -- Thailand
If EAC could borrow Thai baht at 13% per annum, would this be cheaper than either part (a) or part (b) above?
Current spot rate, Thai baht/$
Expected Thai inflation
Expected dollar inflation
Loan principal in U.S. dollars
Thai baht interest rate, 1-year loan
US dollar interest rate, 1-year loan
First, it is necessary to forecast the future spot exchange rate for the baht/$.
PPP forecast of Thai baht/$