Chapter Fifteen - University of Nevada, Reno

Return on U.S. loan = 0.07 x $100 million = $ 7,000,000. Return on Brazilian bond = (.08 x Real 100 m)/1.00 = $ 8,000,000. Total interest earned = $15,000,000. Net return on investment = $15 million - $13 million/$200 million = 1.00 percent. b. What will be the net return on this $200 million investment if the exchange rate changes to real 1.20/$? ................
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