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  • 27 6 Week 5 IFM

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    Pragnesh Patel
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    The document compares taking out a $5 million loan in Indian rupees (INR) versus US dollars. Taking the loan in INR at a 7% interest rate over 3 months would result in a total repayment of INR 241.1 million. Taking the same loan in USD at a 2.8% interest rate would require a repayment of $5.03 million, equivalent to INR 312.2 million at current exchange rates. Therefore, it is recommended to take the loan in INR since the repayment amount would be INR 60.9 million less.

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    27-6-Week-5-IFM

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    The document compares taking out a $5 million loan in Indian rupees (INR) versus US dollars. Taking the loan in INR at a 7% interest rate over 3 months would result in a total repayment of INR 241.1 million. Taking the same loan in USD at a 2.8% interest rate would require a repayment of $5.03 million, equivalent to INR 312.2 million at current exchange rates. Therefore, it is recommended to take the loan in INR since the repayment amount would be INR 60.9 million less.

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    16 views2 pages

    27 6 Week 5 IFM

    Uploaded by

    Pragnesh Patel
    The document compares taking out a $5 million loan in Indian rupees (INR) versus US dollars. Taking the loan in INR at a 7% interest rate over 3 months would result in a total repayment of INR 241.1 million. Taking the same loan in USD at a 2.8% interest rate would require a repayment of $5.03 million, equivalent to INR 312.2 million at current exchange rates. Therefore, it is recommended to take the loan in INR since the repayment amount would be INR 60.9 million less.

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    If the loan is taken up in INR

    Loan amount Spot Rate USD/INR Loan amount in INR Interest rate for 3 months (annualized) on INR Total Interest mount paid after 3 months Total amount paid back to Bank after 3 months in INR FWD 3 months rate USD/INR Equivalent $ after 3 months $5,000,000 47.40 237,000,000 7% 4,147,500 241,147,500 62.00 $3,889,476

    If the loan is taken up in USD


    Loan amount $5,000,000 Interest rate for 3 months (annualized) on USD 2.80% Total Interest mount paid after 3 months $35,000 Total amount paid back to Bank after 3 months in $ $5,035,000 FWD 3 months rate USD/INR 62.00 Equivalent INR after 3 months 312,170,000

    * It is better to avail loan in INR as effective repayment will be Less as compared to the repayment required in USD loan. As calculated above, repayment in INR loan is INR 60,952,500 less. *Hence best option as per me is to go for INR loan.

    If the loan is taken up in INR


    Loan amount Spot Rate USD/INR Loan amount in INR Interest rate for 3 months (annualized) on INR Total Interest mount paid after 3 months Total amount paid back to Bank after 3 months in INR $5,000,000 47.40 237,000,000 7% 4,147,500 241,147,500

    If the loan is taken up in USD


    Loan amount $5,000,000 Interest rate for 3 months (annualized) on USD 2.80% Total Interest mount paid after 3 months Total amount paid back to Bank after 3 months in $ FWD 3 months rate USD/INR Equivalent INR after 3 months $35,000 $5,035,000 47.62 239,766,700

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