I am seeing an 11% interest rate in dollars, and a 5% interest rate in yen. Is there a typo here, or is the answer too simple?
Am I missing something about the interest rates?
You're correct... as I inderstand it, were supposed to be making a choice to borrow money in either in the US or Japan.
There must be something I am missing. My instincts yell that a lower interest rate is going to save money, but let me double check.
No matter what way I am doing this, I am getting the same numbers, so I am just going to give them.
In dollars, $5,000,000 has a one time fee of $25,000, and twenty interest payments of $275,000 for a total of $5,500,000In yen, ¥1,250,000,000 has twenty interest payments of ¥31,250,000 for a total of ¥625,000,000, which translates back into dollars to be $2,500,000. This is a no brainer, since borrowing in yen costs less than half as much in interest and fees.
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