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

All Amounts in $ Amount in USD when the loan was taken = 1,200 million South Korean Won / 1,200 = 1000000 $ Current amount in USD owing to appreciation 1500000000 Won which is 1500 Million Korean Won Thus, the Cool Company has gained 300 Million Korean Won more on the loan owing to the rising USD.

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