Blade Case - Chapter 7

academic year interest rate of 3.76 percent would pay a 5,032 dollars interest over 10 years,

1. A condo in Orange Beach, Alabama, listed for $1.4 million with 20% down and financing at 5% for 30 years. What would the monthly payment be?

26. A financial manager has detrermined that the appropriate rate discount for a foreign project is 17 percent. However, that discount rate applies in the United States using dollars. What discount rate should be used in the foreign country using the foreign currency? The inflation rate in the United States and in the foreign country is expected to be 3 percent and 8 percent, respectively.

8. Karen has $16,000 that she wants to invest for 1 year. She can invest this amount at The North Bank and earn 5.50 percent simple interest. Or, she can open an account at The South Bank and earn 5.39 percent interest, compounded monthly. If Karen decides to invest at The North Bank, she will:

b. What is the present value of this annuity if the opportunity cost rate is 10% annually? 10% compounded semiannually?

Banks are not the only financial intermediary from which corporations can obtain financing. What are the other intermediaries? How much financing do they supply, relative to banks, in the United Kingdom, Germany, and Japan?

We analyzed assumptions required to adopt each of proposed approaches. Approach (b) - $US cash flow discounted at $US rate - assumes that:

1. Take the PV of these yen cash flows at 7.1% This equals Yen 24,258,824,814.179

| • Earn interest return from USD deposits: = 60,018,756 × 0.01652 = 495,155• Withdraw all USD deposits with interest: = 60,018,756 + 495,155 = 60,513,911•

b) & c) With a same $18,000 investment, in order to earn $35,000 after 6 years, how the nominal interest rates of the First National Bank differ if coumpounded annually, semiannually, quarterly and daily?

4.16 Suppose five-year deposit rates on Eurodollars and Euro marks are 12% and 8%, respectively. If the current spot rate for the mark is $0.50, then the spot rate for the mark five years from now implied by these interest rates is

Due to their international business exposure and experience in brokering between Japanese and overseas clients, IBJ proposed an alternative method in which compromises between AAR and NPV/IRR in calculating the financial projections. As shown on Appendix A, the ACFR is positive at +79.1%, considerably much better than the original AAR of -1%.

International Financial Management Trial Exam Closed Book Examination INCLUDEPICTURE uvafileserverjligter1DataOnderwijsInternational Financeif2008sbriederLocal SettingsTempRarDI04.890ABS-logo.gif MERGEFORMAT Closed Book Examination Answer as brief and concise as possible redundant or superfluous remarks may lead to a lower score. The maximum score per problem is given between parentheses. The maximum score of the whole exam is 100 points. QUESTION 1 - 20 points SHAPE MERGEFORMAT This graph depicts the REAL value of the broad index which is a weighted average of the foreign exchange values of the U.S. dollar against the currencies of a large group of major U.S. trading partners. a) Consider the following table of price levels,

Great Eastern Toys is a company in Hong Kong that exports a huge percent of its total sales to the North American and European markets and hence is exposed to currency risk. Previously, the company was occupied with expanding their business and the company 's management had never given much attention to currency risk until their recent meeting with their banker. The banker pointed out that the depreciation of the European currencies during the previous two years had resulted in a substantial loss of income. The company 's management was indeed convinced that they should begin to devote more time and manage their currency position. In this report, we are going to explore the different options for Great Eastern Toys to hedge

Based on your answer to question 2, how would Mesa’s cash flows be affected by the expected exchange rate movements? Explain.