# 20 by xiuliliaofz

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```									Chapter 20: Analysis of Financing with a Foreign Currency [Exhibit from Chapter]

This template helps students in analyzing the impact of financing with a foreign currency.
Students need to enter the required information in the input screen (green shaded cells).
Output is automatically updated as information in the input screen is changed.

Input Screen
1. Existing interest rate in the foreign country               8%
2. Existing interest rate in the home country                 15%
3. Possible rate changes the in foreign currency (in %)       -6%       -4%        -1%         1%     4%
4. Probability of occurrence for exchange rate changes         5%       10%        15%        20%    20%

Output Screen
Effective Financing Rate as per the Input Variables         1.52%     3.68%     6.92%        9.08% 12.32%
Probability * Effective Financing Rate                      0.08%     0.37%     1.04%        1.82% 2.46%
The Overall Effective Financing Rate                       10.54%
6%     8%    10%
15%    10%     5%

14.48% 16.64% 18.80%
2.17% 1.66% 0.94%
Chapter 20: Analysis of Financing with a foreign Currency Problem

This template helps students in analyzing the impact of financing with a foreign currency.
Students need to enter the required information in the input screen (green shaded cells).
Output is automatically updated as the information in the input screen is changed.

Please change the exchange rate (item 3a) in order to see its impact on the effective financing rate for a U.S. firm.

Input Screen
1. Existing interest rate in the foreign country                          8%
2. Existing interest rate in the home country                            15%
3. Possible rate changes the in foreign currency (in %)                  -4%       -1%         0%       3%
3a. Possible rate changes the in foreign currency (in %)                 -3%        5%         6%       7%
4. Probability of occurrence for exchange rate changes                   20%       30%        10%      40%

Conclusion:
The higher the level of currency appreciation, the higher is the effective financing rate for the U.S. firm

Output Screen
Effective Financing Rate as per the Input Variables                    3.68%     6.92%       8.00% 11.24%
Probability * Effective Financing Rate                                 0.74%     2.08%       0.80% 4.50%
The Overall Effective Financing Rate                                   8.11%
The Overall Effective Financing Rate as per variables in item 3a      12.64%
g rate for a U.S. firm.

for the U.S. firm
Chapter 20: Analysis of Financing with Two Foreign Currencies [Exhibit from Chapter]

This template helps students in analyzing the impact of financing with two foreign currencies.
Students need to enter the required information in the input screen (green shaded cells).
Output is automatically updated as information in the input screen is changed.

Input Screen
1. Current interest rate in country #1                                        8%
2. Possible currency changes in country #1 (in %)                             1%                  3%    9%
3. Probability of currency change in country #1                              30%                 50%   20%
4. Current interest rate in country #2                                        9%
5. Possible currency changes in country #2 (in %)                            -1%                  3%    7%
6. Probability of currency change in country #2                              35%                 40%   25%
7. Portfolio weight for country #1                                           50%
8. Portfolio weight for country #2                                           50%

Output Screen
Effective Financing Rate for Country #1                                     9.08%         11.24%     17.72%
Effective Financing Rate for Country #2                                     7.91%         12.27%     16.63%
Effective Financing Rates     Joint
For country#1 For country#2 Joint Prob.
9.08%          7.91%     10.50%
9.08%         12.27%     12.00%
9.08%         16.63%       7.50%
11.24%          7.91%     17.50%
11.24%         12.27%     20.00%
11.24%         16.63%     12.50%
17.72%          7.91%       7.00%
17.72%         12.27%       8.00%
17.72%         16.63%       5.00%
Overall Effective Financing Rate from Two Countries' financing             11.86% =final answer
For Portfolio
8.4950%       0.8920%
10.6750%       1.2810%
12.8550%       0.9641%
9.5750%       1.6756%
11.7550%       2.3510%
13.9350%       1.7419%
12.8150%       0.8971%
14.9950%       1.1996%
17.1750%       0.8588%
Chapter 20: Analysis of Financing with Two Foreign Currencies Problem

This template helps students in analyzing the impact of financing with two foreign currencies.
Students need to enter the required information in the input screen (green shaded cells).
Output is automatically updated as the information in the input screen is changed.

Please change the exchange rate (item 1a and item 5a) in order to see its impact on the effective financing rate for a U.S. firm.

Input Screen
1. Current interest rate in country #1                                         9%
2. Possible currency changes in country #1 (in %)                              4%                 7%
2a. Possible currency changes in country #1 (in %)                             6%                 8%
3. Probability of currency change in country #1                               70%                30%
4. Current interest rate in country #2                                         7%
5. Possible currency changes in country #2 (in %)                              6%                 9%
5a. Possible currency changes in country #2 (in %)                             7%                10%
6. Probability of currency change in country #2                               50%                50%
7. Portfolio weight for country #1                                            40%
8. Portfolio weight for country #2                                            60%

Partial Output Screen
Resulted Overall Effective Financing Rate from Two Countries' financing
Final answer due to items 2 and 5=                                 14.75%
Final answer due to items 2a and 5=                                15.49%
Final answer due to items 2 and 5a=                                15.39%

Conclusion:
The effective financing rate of the portfolio is positively related to the
degree of appreciation in the currency #1 or currency #2

Output Screen
Effective Financing Rate for Country #1                                    13.36%         16.63%
Effective Financing Rate for Country #2                                    13.42%         16.63%
Effective Financing Rates     Joint
For country#1 For country#2 Joint Prob.
13.36%         13.42%     35.00%
13.36%         16.63%     35.00%
16.63%         13.42%     15.00%
16.63%         16.63%     15.00%
Overall Effective Financing Rate from Two Countries' financing             14.75% =final answer due to items 2 and 5

Output Screen
Effective Financing Rate for Country #1                                    15.54%         17.72%
Effective Financing Rate for Country #2                                    13.42%         16.63%
Effective Financing Rates     Joint
For country#1 For country#2 Joint Prob.
15.54%         13.42%     35.00%
15.54%         16.63%     35.00%
17.72%         13.42%     15.00%
17.72%         16.63%     15.00%
Overall Effective Financing Rate from Two Countries' financing          15.49% =final answer due to items 2a and 5

Output Screen
Effective Financing Rate for Country #1                                  13.36%         16.63%
Effective Financing Rate for Country #2                                  14.49%         17.70%
Effective Financing Rates     Joint
For country#1 For country#2 Joint Prob.
13.36%         14.49%     35.00%
13.36%         17.70%     35.00%
16.63%         14.49%     15.00%
16.63%         17.70%     15.00%
Overall Effective Financing Rate from Two Countries' financing           15.39% =final answer due to items 2 and 5a
financing rate for a U.S. firm.

For Portfolio
13.3960%      4.6886%
15.3220%      5.3627%
14.7040%      2.2056%
16.6300%      2.4945%
due to items 2 and 5

For Portfolio
14.2680%       4.9938%
16.1940%       5.6679%
15.1400%       2.2710%
17.0660%       2.5599%
due to items 2a and 5

For Portfolio
14.0380%      4.9133%
15.9640%      5.5874%
15.3460%      2.3019%
17.2720%      2.5908%
due to items 2 and 5a

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