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Firm A is a U.S. MNC who wants to finance a pound denominated asset in...

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Accounting

Firm A is a U.S. MNC who wants to finance a pound denominated asset in England, and therefore wants to borrow 40 million pounds for 5 years. A can borrow pounds at 6% annual rate and borrow dollar at 2% annual rate.

Firm B is a British MNC who wants to finance a dollar denominated asset, and therefore wants to borrow 60 million dollars for 5 years. B can borrow dollars at 3% and borrow pounds at 4% annual rate.

Assume 1 pound=1.5 dollar.

a) What is QSD?

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