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Biopharma-Australia can borrow fund in Australia with an interest rate of 11.47% to invest 1.85...

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Finance

Biopharma-Australia can borrow fund in Australia with an interest rate of 11.47% to invest 1.85 million Chinese yuan (CNY) and expected return of CNY2.13 million next year. Assume that Biopharma-Australia and Haier-China engage in a parallel loan in which the Haier-China gives Biopharma Australia CNY1.85 million in exchange for a loan in Australian dollar (A$) at the current exchange rate A$0.2989/CNY. These loans will be repaid by both parties at the end of one year. Assume that next year, Biopharma-Australia will pay the Haier-China 14.56% interest on CNY1.85 million and that the Haier-China will pay Biopharma-Australia 7.06% interest on the Australian dollar loan. Also, Biopharma-Australia believes that the CNY will depreciate to A$0.2173/CNY next year. How much the Biopharma-Australia will make a profit or loss in A$ from this parallel loan agreement in one year. (enter the whole number without sign or symbol)

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