Business
Business, 26.06.2019 19:40, fruitasticgabs9803

3. 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 b25.0/$ in july 1997, siam’s interest payments alone were over $900 million on its outstanding dollar debt (with an average interest rate of 8.40% on its u. s. dollar debt at that time). assuming siam cement took out $50 million in debt in june 1997 at 8.40% interest, and had to repay it in one year when the spot exchange rate had stabilized at b42.0/$, what was the foreign exchange loss incurred on the transaction?

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