Question
In: Finance
Grupo Bimbo (Mexico). Grupo Bimbo, headquartered in Mexico City, is one of the largest bakery companies...
Grupo Bimbo (Mexico). Grupo Bimbo, headquartered in Mexico City, is one of the largest bakery companies in the world. On January 1st, when the spot exchange rate is Ps10.80/$, the company borrows $25.0 million from a New York bank for one year at 6.80% interest (Mexican banks had quoted 9.60% for an equivalent loan inpesos). During that year, U.S. inflation is 2.0% and Mexican inflation is 4.0%. At the end of the year the firm repays the dollar loan.
a. If Bimbo expected the spot rate at the end of one year to be equal to purchasing power parity, what would be the cost to Bimbo of its dollar loan in peso-denominated interest?
b. What is the real interest cost (adjusted for inflation) to Bimbo, in peso-denominated terms, of borrowing the dollars for one year, again assuming purchasing powerparity?
c. If the actual spot rate at the end of the year turned out to be Ps9.60/$,what was the actual peso-denominated interest cost of the loan?
Solutions
jeff jeffy answered 7 months agoRelated Solutions
Grupo Bimbo (Mexico). Grupo Bimbo, headquartered in Mexico City, is one of the largest bakery companies...
Grupo Bimbo (Mexico). Grupo Bimbo, headquartered in Mexico
City, is one of the largest bakery companies in the world. On
January 1st, when the spot exchange rate isPs10.82/$, the company
borrows $24.8 million from a New York bank for one year at 6.84%
interest (Mexican banks had quoted 9.64% for an equivalent loan
in pesos). During that year, U.S. inflation is 2.4% and Mexican
inflation is 4.6%. At the end of the year the firm repays the
dollar loan.
a....
Headquartered in Mumbai, India, Tata Motors is one of the largest multinational manufacturing companies. It manufactures...
Headquartered in Mumbai, India, Tata Motors is one of the
largest multinational manufacturing companies.
It manufactures commercial and passenger vehicles—cars, trucks,
vans, coaches, buses, construction
equipment, and military vehicles. Tata Motors has several auto
manufacturing and assembly plants,
and research and development centers located across India,
including in Jameshedpur, Lucknow, and
Pune. With a solid base in the country, Tata Motors has also built
its operations in Argentina, South
Africa, Thailand, and the United Kingdom. In 2014, the company was...
Maria, a resident of Mexico City, Mexico, formed MZE Corp. in Mexico under
Maria, a resident of Mexico City, Mexico, formed MZE Corp. in Mexico under Mexican law but planned to do business in the United States. Is MZE eligible to elect S corporation status in the United States? Explain.
walmart is one of the largest companies in the world, however, they are only in 28...
walmart is one of the largest companies in the world, however, they
are only in 28 countries. what can they do to expand and have a
wider platform in the rest of the worlds countries?
12.AGGREGATE DEMAND AND AGGREGATE SUPPLY a. Suppose Mexico, one of our largest trading partners and purchaser...
12.AGGREGATE DEMAND AND AGGREGATE SUPPLY
a. Suppose Mexico, one of our largest trading partners and
purchaser of a large quantity of our exports, goes into a
recession. Use the AD/AS model to determine the likely impact on
our equilibrium GDP and price level.
b. What impact would decrease in the size of the labor force
have on GDP and the price level according to the AD/AS model?
c. Suppose the Federal Reserve increases the supply of money.
What impact would...
SITUATION One of the largest multinational oil and gas companies with operations including exploration and production,...
SITUATION
One of the largest multinational oil and gas companies with
operations including exploration and production, refining,
transport, distribution, petrochemicals, power generation, and
trading was looking for ways to better control rising costs at
their onshore and offshore facilities.
Additionally, as their unplanned deferment rates continued to rise,
there was a perception that labor productivity was decreasing. GP
Strategies® conducted operational excellence (OE) assessments at
several locations, which uncovered the following gaps:
a. little or no maintenance planning and scheduling;...
Biogen is one of the largest and oldest independent biotechnology companies in existence. How has its...
Biogen is one of the largest and oldest independent
biotechnology companies in existence. How has its strategy changed
over the years to stay competitive with low-cost biotechnology
companies in developing countries or new companies in Silicon
Valley? What are some ways it has cut R&D costs? I know Biogen
has the trust of consumers, but once a drug is developed it can be
sold to another company and branded differently. Hopefully, my
question makes sense. Thank you!
Case Let Analysis: Oman Commercial Vehicle Manufacturer Company is one of the largest companies in the...
Case Let Analysis:
Oman Commercial Vehicle Manufacturer Company is one of the
largest companies in the Sultanate of Oman. It is the third-largest
manufacturer of passenger cars. Extensive quality enhancement and
cost reduction task was initiated in September 2018. The outcome of
this task helped the company to reach a profit of 28 million while
the loss in the year ended March 2017 was 500 million.
The company followed the cost cutting system and saved more
than 300 million of...
Headquartered in Toronto, Indigo Books & Music Inc. (TSX: IDG) is Canada’s largest book retailer and...
Headquartered in Toronto, Indigo Books & Music Inc.
(TSX: IDG) is Canada’s largest book retailer and the third largest
in North America. The following information was taken from the
management discussion and analysis section of the company’s March
31, 2020, annual report (in thousands):
2020
2019
2018
Cost of sales (cost of goods sold)
$600,400
$585,700
$538,500
Inventories
$229,706
$232,694
$224,406
Additional information from the company’s annual
report:
1. Inventories are valued at the lower of cost,
determined using a...
CVRX Ltd., one of the world’s largest biotechnology companies, invests considerable amounts in research and development...
CVRX Ltd., one of the world’s largest biotechnology companies,
invests considerable amounts in research and development each year.
In the most recent fiscal year (2020), the R&D expense was $500
million, the net income was $1,000 million, and the book value of
equity was $8,000 million. The R&D expenses for the prior 3
years are as follows: $1,200 million (2019), $900 million (2018),
and $600 million (2017).
Would you expect the Free Cash Flows to the Firm (FCFF) of CVRX...
ADVERTISEMENT
ADVERTISEMENT
Latest Questions
- You are tasked with assessing the health department’s intervention program in preventing recurrence of acute alcohol...
- Compare the MOSFET, JFET , and BJT and identify the reasons these devices behave differently. What...
- How would you use SAS Enterprise Miner to create a neural network model of your example?
- Explain the use of neural networking modeling in predictive analytics.
- Current Market Mix of Netflix, as detail as possible, please.
- This is all one question, thank you so much in advance! You must evaluate a proposal...
- X Company is considering the purchase of a new processor that costs $200,000. Shipping and setup...
ADVERTISEMENT