Ford Motors considers issuing a Singapore dollar denominated bond at its present

Question

Ford Motors considers issuing a Singapore dollar denominated bond at its present coupon rate of 7.5%. The U. S. dollar-denominated bonds issued in the United States would have a coupon rate of 12%. Ford could either issue U. S. dollar denominated bonds with a par value of $10 million or bonds denominated in Singaporean dollar for equivalent amount at current spot rate of 1 Singaporean dollar=$0.40.The forecasted value of Singapore dollar at the end of each of the next four years are: $0.42, $0.46, $0.48 and $0.50 respectively

Should Ford Motors issue bonds denominated in Singapore dollars?
Answer
Yes because the financing cost of issuing Singapore dollar bond is 10% in $ terms
Yes because the financing cost of issuing Singapore dollar bond is 8.67% in $ terms
No because the financing cost of issuing Singapore dollar bond is 13.74% in $ terms
No because the financing cost of issuing Singapore dollar bond is 11.75% in $ terms

Explanation / Answer

no because the financing cost of issuing Singapore dollar bond is 13.74% in $ terms

Related Questions

Navigate

• Browse (All)
• Browse F
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.