Question

Multinational Financial Management Olga is the CFO of Cool Company, headquartered in Silicon Valley. All of the shareholders live in the United States. Recently, Cool Company EDE received the following loan in millions of Korean Won: W1,200 M This was to finance a new factory in South Korea. At the time the loan was received, the exchange rate between the USD was 1 USD for 1200 South Korean Won Due to the stronger US economy, the USD appreciated in value to 1 USD for 1500 SKW How much has Cool Company made on the loan (either in a loss or as a gain) due to the rising USD?

Answer 1

Profit made on the loan due to the rising USD is given as equal to=1200/1200*1500-1200=300 million South Korean Won