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Haier-China can borrow fund in China with an interest rate of 11.28% to invest 1.63...

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Finance

Haier-China can borrow fund in China with an interest rate of 11.28% to invest 1.63 million Australian dollars (A$) and expected return of A$1.92 million next year. Assume that Haier-China and Biopharma-Australia engages in a parallel loan in which the Biopharma-Australia gives Haier-China A$1.63 million in exchange for a loan in Chinese yuan (CNY) at the current exchange rate CNY3.5719/A$. These loans will be repaid by both parties at the end of one year. Assume that next year, Haier-China will pay Biopharma-Australia 14.17% interest on A$1.63 million and that the Biopharma-Australia will pay Haier-China 7.05% interest on the Chinese yuan loan. Also, Haier-China believes that the A$ will depreciate to CNY3.2913/A$ next year. How much the Haier-China will make a profit or loss in CNY from this parallel loan agreement in one year. (enter the whole number with no sign or symbol)

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