A US firm anticipates receiving 10 million Swedish Krona (SEK) in one year from a new contract that they just signed. They plan to pay this out as a dividend once they receive it. They also plan to use a forward contract to lock in an exchange of the SEK to US dollars. The current savings rate in the US is 1%/year and the rate to save in SEK is 2.8%/year. The current exchange rate is 0.1475 USD per SEK. What is the present value of 10 million SEK to be received at time t = 1 in SEK? (b) What is the present value of 10 million SEK to be received at time t = 1 in US dollars? (c) What is the future value, at t = 1, of 10 million SEK to be received at time t = 1 in US dollars?
A US firm anticipates receiving 10 million Swedish Krona (SEK) in one year from a new contract that they just signed. They plan to pay this out as a dividend once they receive it. They also plan to use a forward contract to lock in an exchange of the SEK to US dollars. The current savings rate in the US is 1%/year and the rate to save in SEK is 2.8%/year. The current exchange rate is 0.1475 USD per SEK.
What is the present value of 10 million SEK to be received at time t = 1 in SEK?
(b) What is the present value of 10 million SEK to be received at time t = 1 in US dollars?
(c) What is the
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