Here is the synopsis of our sample research paper on Rondo; Foreign Loan. Have the paper e-mailed to you 24/7/365.
Essay / Research Paper Abstract
This 5 page paper looks at a case study provided by the student. A company is considering taking a loan in a foreign currency, the repayments are calculated and a comparison made with a home currency loan. The potential of hedging is then discussed. The bibliography cites 1 source.
Page Count:
5 pages (~225 words per page)
File: TS14_TErondo6.rtf
Buy This Term Paper »
Unformatted sample text from the term paper:
is being charged is much lower, only 6.7% compared to 11.5%, the Swiss Franc (SF) loan is also a lower interest rate than the other alternatives, such as the issuance
of preference stock, convertible bonds or mortgage bond. The first consideration is to look at the repayments that would need to be paid for the SF loan. The loan
is a ten year loan, and we are given the expected exchange rates for the next 7 year, not ten years. To undertake the calculation we need to make some
assumption about the last three years. There is no data on which this can be based so we will make projection based on the first seven years using least squares
regression. There are two options given, this gives us the following. Figure 1 10,000,000 SF Loan payments Loan outstanding at beginning of the year Interest payable
at 6.75% capital repayment loan outstanding at end of year 2005 10,000,000 675,000 1,000,000 9,000,000 2006 9,000,000 607,500 1,000,000 8,000,000 2007 8,000,000 540,000 1,000,000 7,000,000 2008 7,000,000 472,500 1,000,000 6,000,000
2009 6,000,000 405,000 1,000,000 5,000,000 2010 5,000,000 337,500 1,000,000 4,000,000 2011 4,000,000 270,000 1,000,000 3,000,000 2012 3,000,000 202,500 1,000,000 2,000,000 2013 2,000,000 135,000 1,000,000 1,000,000 2014 1,000,000 67,500 1,000,000 0
Now we can look at the repayment in SF and convert them to dollars so that the expected cash flow can be assessed. Figure 2 Repayments of SF 10,000,000
in Dollars Year Interest payment in SF Capital repayment in SF Total repayment in SF Exchange rate Payment in $ 2005 675,000 1,000,000 1,675,000 1.33 1,259,398 2006 607,500 1,000,000
1,607,500 1.29 1,246,124 2007 540,000 1,000,000 1,540,000 1.25 1,232,000 2008 472,500 1,000,000 1,472,500 1.21 1,216,942 2009 405,000 1,000,000 1,405,000 1.17 1,200,855 2010 337,500 1,000,000 1,337,500 1.14 1,173,246 2011 270,000 1,000,000
...