Multinational Financial Management Youna is the CFO of Cool Company, headquarter

Question

Multinational Financial Management Youna is the CFO of Cool Company, headquartered in Silicon Valley.   All of the shareholders live in the United States. Recently, Cool Company received the following loan in millions of Korean Won: 1,200 M This was to finance a new factory in South Korea. At the time the loan was received, the exchange rate between the USD was 1 USD for 1200 South Korean Won. Due to the stronger US economy, the USD appreciated in value to 1 USD for 1500 SKW. How much has Cool Company made on the loan (either in a loss or as a gain) due to the rising USD? Multinational Financial Management Youna is the CFO of Cool Company, headquartered in Silicon Valley.   All of the shareholders live in the United States. Recently, Cool Company received the following loan in millions of Korean Won: 1,200 M This was to finance a new factory in South Korea. At the time the loan was received, the exchange rate between the USD was 1 USD for 1200 South Korean Won. Due to the stronger US economy, the USD appreciated in value to 1 USD for 1500 SKW. How much has Cool Company made on the loan (either in a loss or as a gain) due to the rising USD?

Explanation / Answer

Now the original loan is 1200 Million Won = 1200 Million/1200 = 1 Million USD

Now due to USD appreciation, the exchnage rate is 1 USD for 1500 Won

So the company will get 1 Million * 1500 = 1500 Million Won

So the Gain is 1500 Million - 1200 Million = 300 Million Won due to rising USD

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