Question

Siam Cement. Siam​ Cement, the​ Bangkok-based cement​ manufacturer, suffered enormous losses with the coming of the Asian crisis in 1997. The company had been pursuing a very aggressive growth strategy in the​ mid-1990s, taking on massive quantities of​ foreign-currency-denominated debt​ (primarily U.S.​ dollars). When the Thai baht​ (B) was devalued from its pegged rate of B25.9​/$ in July​ 1997, Siam's interest payments alone were over​ $900 million on its outstanding dollar debt​ (with an average interest rate of 8.73% on its U.S. dollar debt at that​ time). Assuming Siam Cement took out $ 53million in debt in June 1997 at 8.73​% ​interest, and had to repay it in one year when the spot exchange rate had stabilized at $B41.2/$​, what was the foreign exchange loss incurred on the​ transaction?

The amount of the foreign exchange loss incurred on the transaction is B __.  (Round to the nearest whole​ number.)

Answer 1