Is Lantau Beer's Japanese Yen Debt Still Cheap?

Calculations:

Annual yen payments on debt agreement (¥):

• 2010: ¥11,500,000
• 2011: ¥11,500,000
• 2012: ¥11,500,000

Average exchange rate, ¥/HK$:

• 2010: ¥11,500,000 / HK$12.19 = 943,979
• 2011: ¥11,500,000 / HK$12.12 = 948,515
• 2012: ¥11,500,000 / HK$11.12 = 1,036,232

Annual yen debt service, HK$:

• 2010: HK$12.19
• 2011: HK$12.12
• 2012: HK$11.12

Based on the given data, we can calculate the necessary variables to analyze Lantau Beer's Japanese Yen-denominated debt. Let's examine the variables and assess whether the debt can still be considered "cheap."

Annual yen payments on the debt agreement:

The annual yen payments on the debt agreement remain constant at ¥11,500,000 for each year (2010, 2011, and 2012).

Average exchange rate, ¥/HK$:

The average exchange rate between Japanese Yen and Hong Kong dollars for each year is provided as ¥11,500,000. However, there may be an error in the data presentation as the exchange rate should be expressed in terms of ¥/HK$. Without accurate exchange rate values, it is challenging to assess the impact on the debt's cost.

Annual yen debt service in HK$:

The annual yen debt service is provided as HK$12.19 for 2010, HK$12.12 for 2011, and HK$11.12 for 2012.

The exchange rate plays a crucial role in determining the cost of borrowing and whether the debt is considered cheap or expensive. To properly assess the CFO's belief that the debt is no longer cheap, it would be necessary to compare the historical exchange rates with the current rates and evaluate any significant changes. In summary, while we can calculate some variables related to Lantau Beer's debt, the absence of accurate exchange rate data prevents us from conducting a comprehensive analysis.