- Home
- Bengal Math Curriculum
- Statistics Help
- Statistics Consulting
- Popular Services
- *99 Cents for 1 Math Problem
- Statistics Help
- Statistics Solutions
- Statistics Symbols
- Statistics Lecture Notes
- Statistics Class Notes
- Hire Freelancer - xlance Alternative
- Math Olympiad
- Free Accounting Homework Help
- Free Business Math Homework Help
- Free Programming Homework Help
- Free Finance Homework Help
- Free Economics Homework Help
- Free Chemistry Homework Help
- Free Biology Homework Help
- Free Management Homework Help
- Free Engineering Homework Help
- Free Chemical Engineering Homework Help
- Free Mechanical Engineering Homework Help
- Free Computer Science Homework Help
- Free Bioinformatics Homework Help
- Free Calculus Homework Help
- Free College Homework Help
- Get One Month Coaching ($149)
- Math Curriculum(High Expectation)
- 1-On-1 Coaching
- Accounting Solutions
- Bioinformatics Solutions
- Biology Solutions
- Business Math Solutions
- Calculus Solutions
- Chemical Engineering Solutions
- Chemistry Solutions
- Computer Science Solutions
- Economics Solutions
- Engineering Solutions
- Finance Solutions
- Management Solutions
- Mechanical Engineering Solutions
- Programming Solutions
- Donate
- Almost FREE Service
- Chat Core Dump
- WhiteBoard Sessions
- Submit Math Problems
- Checkout Math Solutions
- Sample Math Video
- College Textbooks
- College Courses
- Coursera Courses
- edX Courses
- Give Gift Certificates to Your Loved One
- Get a Scholarship
- Tell a Friend
- *Online Math Help ($16 per Hour)
- Vedic Maths
- Home Schooling
- Community College Math
- Online Degree Program
- Blog
- We are in News
- FAQ
- Contact Us
- Privacy Policy
- Terms & Condition * Restrictions Apply

- Home
- *99 Cents for 1 Math Problem
- Statistics Help
- Statistics Solutions
- Statistics Symbols
- Statistics Lecture Notes
- Statistics Class Notes
- Hire Freelancer - xlance Alternative
- Math Olympiad
- Free Accounting Homework Help
- Free Business Math Homework Help
- Free Programming Homework Help
- Free Finance Homework Help
- Free Economics Homework Help
- Free Chemistry Homework Help
- Free Biology Homework Help
- Free Management Homework Help
- Free Engineering Homework Help
- Free Chemical Engineering Homework Help
- Free Mechanical Engineering Homework Help
- Free Computer Science Homework Help
- Free Bioinformatics Homework Help
- Free Calculus Homework Help
- Free College Homework Help
- Get One Month Coaching ($149)
- Math Curriculum(High Expectation)
- 1-On-1 Coaching
- Accounting Solutions
- Bioinformatics Solutions
- Biology Solutions
- Business Math Solutions
- Calculus Solutions
- Chemical Engineering Solutions
- Chemistry Solutions
- Computer Science Solutions
- Economics Solutions
- Engineering Solutions
- Finance Solutions
- Management Solutions
- Mechanical Engineering Solutions
- Programming Solutions
- Almost FREE Service
- Chat Core Dump
- WhiteBoard Sessions
- Submit Math Problems
- Checkout Math Solutions
- Sample Math Video
- College Textbooks
- College Courses
- Coursera Courses
- edX Courses
- Give Gift Certificates to Your Loved One
- Get a Scholarship
- Tell a Friend
- *Online Math Help ($16 per Hour)
- Vedic Maths
- Home Schooling
- Community College Math
- Online Degree Program
- Blog
- We are in News
- FAQ
- Contact Us
- Privacy Policy
- Terms & Condition * Restrictions Apply

Statistics Help

**Question: **

1. A firm with dollar revenues is considering borrowing $22 million (or the equivalent) for 5 years. They are considering procuring a 5 year loan with annual installment (amortizing) payments. They are considering borrowing in dollars or British pounds which are currently worth $1.2350. The firm can borrow dollars at a 4.25% interest rate and a 3% flotation cost or borrow the pound at a 4.75% interest rate with a 2% flotation cost.

a. If they decide to borrow in pounds, which alternative is likely to expose them to more risk, the loan or the bond alternative? Explain.

b. If there are no flotation costs which alternative (pound or dollar borrowing) do you expect to be cheaper (lower IRR) if UIP holds? Mathematically demonstrate this.

c. Given that there are flotation costs, what do you actually recommend and why? Mathematically show the borrowing costs.

2. Redo part c. of #1 assuming that UIP does not hold with respect to the future exchange rate (You still have the flotation costs). Suppose that the pound instead decreases in value by 2.50% per year. What are the pound and dollar expected borrowing cost rates (IRRs) now? Which do you now recommend? Explain.

Edit

**TutorTeddy.com & Boston Predictive Analytics**

[ Email your Statistics or Math problems to **help@teddycan.com** (camera phone photos are OK) ]

Boston Office (Near MIT/Kendall 'T'):

Cambridge Innovation Center,

One Broadway, 14th Floor,

Cambridge, MA 02142,

Phone: 617-395-8864

Dallas Office (Near Galleria):

15950 Dallas Parkway,

Suite 400,

Dallas, TX 75248,

Phone: 866-930-6363