Assume Jelly Corporation, a U.S.-based MNC, obtains a one-year loan of 1,500,000 Malaysian ringgit (MYR) at a nominal interest rate of 7%. At the time the loan is extended, the spot rate of the ringgit is $.25. If the spot rate of the ringgit in one year is $.28, the dollar amount initially obtained from the loan is $____, and $____ are needed to repay the loan.
A)375,000; 449,400
B)449,400; 375,000
C)6,000,000; 5,357,143
D)5,357,143; 6,000,000

Question

Quizplus · Accepted Answer

MYR1,500,000 × $.25 = $375,000
(MYR1,500,000 × 1.07) ×$.28 = $449,400