Question

3. Siam Cement. Siam Cement, the Bangkok-based cement manufacturer, suffered enormous losses with the coming of the Asian crisis in 1997. The company had been pursuing a very aggressive growth strat- egy in the mid-1990s, taking on massive quantities of foreign-currency-denominated debt (primarily U.S. dollars). When the Thai baht (B) was devalued from its pegged rate of B25.0/$ in July 1997, Siam's interest payments alone were over $900 million on its out- standing dollar debt (with an average interest rate of 8.40% on its U.S. dollar debt at that time). Assuming Siam Cement took out $50 million in debt in June 1997 at 8.40% interest, and had to repay it in one year when the spot exchange rate had stabilized at B42.0/$, what was the foreign exchange loss incurred on the transaction?

          3. Siam Cement. Siam Cement, the Bangkok-based
cement manufacturer, suffered enormous losses with
the coming of the Asian crisis in 1997. The company
had been pursuing a very aggressive growth strat-
egy in the mid-1990s, taking on massive quantities of
foreign-currency-denominated debt (primarily U.S.
dollars). When the Thai baht (B) was devalued from
its pegged rate of B25.0/$ in July 1997, Siam's interest
payments alone were over $900 million on its out-
standing dollar debt (with an average interest rate of
8.40% on its U.S. dollar debt at that time). Assuming
Siam Cement took out $50 million in debt in June
1997 at 8.40% interest, and had to repay it in one year
when the spot exchange rate had stabilized at B42.0/$,
what was the foreign exchange loss incurred on the
transaction?

3. Siam Cement. Siam Cement, the Bangkok-based
cement manufacturer, suffered enormous losses with
the coming of the Asian crisis in 1997. The company
had been pursuing a very aggressive growth strat-
egy in the mid-1990s, taking on massive quantities of
foreign-currency-denominated debt (primarily U.S.
dollars). When the Thai baht (B) was devalued from
its pegged rate of B25.0/in July 1997, Siam's interest
payments alone were over900 million on its out-
standing dollar debt (with an average interest rate of
8.40% on its U.S. dollar debt at that time). Assuming
Siam Cement took out 50 million in debt in June
1997 at 8.40% interest, and had to repay it in one year
when the spot exchange rate had stabilized at B42.0/,
what was the foreign exchange loss incurred on the
transaction?

Added by Rachel D.

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