You are the vice president of Worldwide InfoXchange,headquartered in Minneapolis, Minnesota. All shareholders of the firm live in the UnitedStates. Earlier this month you obtained a loan of 10 million Canadian dollars from a bankin Toronto to finance the construction of a new plant in Montreal. At the time the loan wasreceived, the exchange rate was $0.81 to the Canadian dollar. By the end of the month, ithas unexpectedly dropped to $0.75. Has your company made a gain or a loss as a result,and by how much?

Intermediate Financial Management (MindTap Course List)
13th Edition
ISBN:9781337395083
Author:Eugene F. Brigham, Phillip R. Daves
Publisher:Eugene F. Brigham, Phillip R. Daves
Chapter27: Multinational Financial Management
Section: Chapter Questions
Problem 9P
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You are the vice president of Worldwide InfoXchange,
headquartered in Minneapolis, Minnesota. All shareholders of the firm live in the United
States. Earlier this month you obtained a loan of 10 million Canadian dollars from a bank
in Toronto to finance the construction of a new plant in Montreal. At the time the loan was
received, the exchange rate was $0.81 to the Canadian dollar. By the end of the month, it
has unexpectedly dropped to $0.75. Has your company made a gain or a loss as a result,
and by how much?

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