Institute of Chartered Financial Analysts of India (ICFAI) University 2006 Certification Finance International and Trade – II - Question Paper

6.2374

48
35
5.75
1.00625
–
65.7665
6.6178

54
35
5.80
1.0150
–
66.7432
6.7744

60
–
5.80
1.0150
35
67.7344
243.9454


Effective cost of the loan in rupee term is provided by ‘r’ in the subsequent formula.

204.505 = 5.7094 PVIF (r/2, 1) + 5.7942 PVIF (r/2, 2) + 6.1475 PVIF (r/2, 3) + 6.5100 PVIF (r/2, 4) + 6.4416 PVIF (r/2, 5) + 6.2579 PVIF (r/2, 6) + 6.2374 PVIF (r/2, 7) + 6.6178 PVIF (r/2, 8) + 6.7744 PVIF (r/2, 9) + 243.9454 PVIF (r/2, 10)

For r/2 = 4% R. H. S. = 211.2528

For r/2 = 5% R. H. S. = 194.1163

\ = =

= 4.3938%

\ r = 8.79%

b. Spot Rate Rs./¥ 0.4081/0.4091

Middle rate = 0.4086

Forward
6
Month
Rs./¥
0.4086 ´
=
0.4178


12
Month
Rs./ ¥
0.4178 ´
=
0.4271


18
Month
Rs./ ¥
0.4271 ´
=
0.4367


24
Month
Rs./ ¥
0.4367 ´
=
0.4465


30
Month
Rs./ ¥
0.4465 ´
=
0.4566


36
Month
Rs./ ¥
0.4566 ´
=
0.4668


42
Month
Rs./ ¥
0.4668 ´
=
0.4773


48
Month
Rs./ ¥
0.4773 ´
=
0.4880


54
Month
Rs./ ¥
0.4880 ´
=
0.4989


60
Month
Rs./ ¥
0.4989 ´
=
0.5101




Month
Principal (¥ million)
Interest rate (%)
Interest payment
Principal repayment
Exchange rate (Rs./¥)
Total repayment rupees in crores

0
5000
–
–
–
0.4081
(204.05)

6
5000
3.00
75.00
–
0.4178
3.1335

12
5000
3.00
75.00
–
0.4271
3.2033

18
5000
3.00
75.00
–
0.4367
3.2753

24
5000
3.00
75.00
–
0.4465
3.3488

30
5000
3.00
75.00
–
0.4566
3.4245

36
5000
3.00
75.00
–
0.4668
3.5010

42
5000
3.00
75.00
–
0.4773
3.5798

48
2500
3.00
75.00
2500
0.4880
125.6600

54
2500
3.00
37.50
–
0.4989
1.8709

60
–
3.00
37.50
2500
0.5101
129.4379

Earning:   Approval pending.