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GB, headquartered in Mexico​ City, is one of the largest bakery companies in the world. On January​ 1st, when the spot exchange rate is Ps11.39/$​, the company borrows $24172329 from a New York bank for
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GB, headquartered in Mexico​ City, is one of the largest bakery companies in the world. On January​ 1st, when the spot exchange rate is Ps11.39/$​, the company borrows $24172329 from a New York bank for one year at 5.9 % interest​. During that​ year, U.S. inflation is 2 % and Mexican inflation is 4 % . At the end of the year the firm repays the dollar loan. If GB expected the spot rate at the end of one year to be equal to purchasing power​ parity, how many pesos GB would need to repay its dollar loan? Round to the nearest peso.

User Humayon Zafar
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1 Answer

13 votes
13 votes

((24172329×11.39)x1.059)/1.04

That is the equation to give you the answer in pesos

User Palani Kannan
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