Assignment:
Q1. Suppose that the cost of borrowing restricted euros is 7% annually, whereas the market rate for these funds is 12%. If a firm can borrow €10 million of restricted funds, how much will it save annually in before-tax franc interest expense?
Q2. Suppose that one of the inducements provided by Taiwan to woo Xidex into setting up a local production facility is a 10-year, $12.5 million loan at 8% interest. The principal is to be repaid at the end of the tenth year. The market interest rate on such a loan is about 15%. With a marginal tax rate of 40%, how much is this loan worth to Xidex?
Your answer must be, typed, double-spaced, Times New Roman font (size 12), one-inch margins on all sides, APA format and also include references.