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  3. suppose that sanders co., a u.s.-based mnc, is con

Suppose that Sanders Co., a U.S.-based MNC, is considering options to finance its U.S. operations...

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Accounting

image Suppose that Sanders Co., a U.S.-based MNC, is considering options to finance its U.S. operations with a one-year loan. Sanders' bank offers a oneyear loan in U.S. dollars at an interest rate of 8.00%, a one-year loan in Canadian dollars at an interest rate of 3.00%, one-year loan in Japane yen at an interest rate of 4.00%. Sanders is considering borrowing a combination of both yen and Canalian The following table shows the effective financing rate for each currency in each outcome. Sanders assumes that the outcome for the Canar spot rate is independent of the outcome for the Japanese yen spot rate. Suppose that Sanders decides to allocate 50.00% of its portfolio to Canadian dollars and 50.00% of its portfolio to Japanese yen. Since each of the two currencies has two possible outcomes, there are four total scenarios for Sanders to consider. These four scenarios are summarized in the following table. Complete the third column of the table, filling in the joint probability of each scenario. Then complete the fourth column of the table, filling in the effective financing rate in each scenario

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