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- The total United States debt as of 8:47:41 m. 8/8/2020 was $80,799,592,554,097. At 10:19:22 A.M. 2/18/2021the debt had grown to $82,466,379,393,581. What is the percent change in the United States debt in that 6-month period? 2. What is the rate of inflation in that same time period (use January’s CPI for the February date since February is not available yet)?7. What is the amount of revaluation surplus on December 31, 2021? A. 600,000 B. 700,000 C. 800,000 D. 0 E. None of them1- a) The Indian Rupee (IR) value was IR70.1/$ on, January 13, 2020. It is trading on IR 72.5/$ on, January 8, 2021. What was the percentage change in its value? Which currency appreciates in the given scenario? 1.5 b) The South African Rand was officially devalued by the SA government in 20X2 during a severe political and economic crisis. The SA government announced on February 21 that the Rand would be devalued by 15%. The spot exchange rate on February 20th was R41.5/$. What was percentage change after falling to R51.2/$?
- Problem 31-11 The International Fisher Effect You observe that the inflation rate in the United States is 2.0 percent per year and that T-bills currently yield 2.5 percent annually. Use the approximate international Fisher effect to answer the following questions. a. What do you estimate the inflation rate to be in Australia, if short-term Australian government securities yield 5 percent per year? (Do not round intermediate calculations and enter your answer as a percent rounded to 1 decimal place, e.g., 32.1.) b. What do you estimate the inflation rate to be in Canada, if short-term Canadian government securities yield 8 percent per year? (Do not round intermediate calculations and enter your answer as a percent rounded to 1 decimal place, e.g., 32.1.) c. What do you estimate the inflation rate to be in Taiwan, if short-term Taiwanese government securities yield 10 percent per year? (Do not round intermediate calculations and enter your answer as a percent rounded…Problem 25Davao Bank loaned P7,500,000 to a borrower on January 1, 2018. The terms of the loan were payment in full on January 1, 2023, plus annual interest payment at 12%. The interest payment was made as scheduled on January 1, 2019. However, due to financial setbacks, the borrower was unable to make its 2020 interest payment and Davao Bank considers the loan impaired and projects the cash flows from the loan as of December 31, 2020. The bank has accrued the interest at December 31, 2019, but did not continue to accrue interest for 2020 due to the impairment of the loan. The projected cash flows are: Date of cash flow Amount projectedas of Dec. 31, 2020December31, 2021 500,000December31, 2022 1,000,000December31, 2023 2,000,000December31, 2024 4,000,000The present value at l2% is as follows:For one period 0.89For two periods 0.80For three periods 0.71For four periods 0.64 Required:1.Prepare a table of amortization for the loan receivable.2. Prepare journal entries for 2018 – 2024.EXCHANGE RATES Table 17.1 lists foreign exchange rates for August 30, 2018. On that day, how many dollars would be required to purchase 1,000 units of each of the following: British pounds, Canadian dollars, EMU euros, Japanese yen, Mexican pesos, and Swedish kronas?
- FOREIGN CAPITAL BUDGETING Sandrine Machinery is a Swiss multinational manufacturing company. Currently, Sandrines financial planners are considering undertaking a 1-year project in the United States. The projects expected dollar-denominated cash flows consist of an initial investment of 52,000 and a cash inflow the following year of 2,400. Sandrine estimates that its risk-adjusted cost of capital is 10%. Currently, 1 U.S. dollar will buy 0.96 Swiss franc. In addition, 1-year risk-free securities in the United States are yielding 3%, while similar securities in Switzerland are yielding 1.50%. a. If this project was instead undertaken by a similar U.S.-based company with the same risk-adjusted cost of capital, what would be the net present value and rate of return generated by this project? b. What is the expected forward exchange rate 1 year from now? c. If Sandrine undertakes the project, what is the net present value and rate of return of the project for Sandrine?FOREIGN CAPITAL BUDGETING Sandrine Machinery is a Swiss multinational manufacturing company. Currently, Sandrines financial planners are considering undertaking a 1-year project in the United States. The projects expected dollar- denominated cash flows consist of an initial investment of 2,000 and a cash inflow the following year of 2,400. Sandrine estimates that its risk-adjusted cost of capital is 10%. Currently, 1 U.S. dollar will buy 0.94 Swiss franc. In addition, 1-year risk-free securities in the United States are yielding 3%, while similar securities in Switzerland are yielding 1.50%. a. If this project was instead undertaken by a similar U.S.-based company with the same risk-adjusted cost of capital, what would be the net present value and rate of return generated by this project? b. What is the expected forward exchange rate 1 year from now? c. If Sandrine undertakes the project, what is the net present value and rate of return of the project for Sandrine?Question (1) suppose the british pound U-S dollar exchange rate is currently So=£.50.Further suppose that the inflation rate in Britain is predicted to be 10percent over the year ,coming year and(for the moment)the inflation rate in the United States is predicted to be zero.What do you think the exchange rate will be in a year
- 12 Suppose the annual interest rates in the U.S. (home nation) and the U.K (foreign nation) are 8% and 6%, respectively. A U.K. interest arbitrager decides to invest £10,000 in the U.S for three months. Given that the current spot rate is $2 per pound, calculate the EUD from investing in the U.S., assuming that on the maturity date the U.S. dollar is expected to depreciate by 1%. Interpret your resultMf2. 5. In March 2022, General Electric and JPMorgan Chase enter into a three-year OIS. GE agrees to pay JPMorgan Chase a fixed rate of 4% every three months on a notional principal of $120 million. JPMorgan Chase agrees to pay GE the three-month SOFT floating reference rate on the same $120 million notional principal. For General Electric, what are the floating cash flows received, fixed cash flows paid, and overall net cash flows with the following SOFR rates: 2.15; 2.65; 2.90; 3.15; 3.20; 3.45; 3.60; 3.80; 3.95; 4.05; 4.20; 4.35Ay 3. Suppose that in 2025, one- and two-year interest rates are 6.4% in the United States and 1.9% in Japan. The spot exchange rate is USD/JPY = 120.06. Suppose that one year later, interest rates are 3% in both countries, while the value of the yen has appreciated to USD/JPY = 114.80. A) Benjamin Pinkerton from New York invested in a U.S. two-year zero-coupon bond at the start of the period and sold it after one year. What was his return? B) Madame Butterfly from Nagasaki bought some dollars. She also invested in the two-year U.S. zero-coupon bond and sold it after one year. What was her return in yen? C) Suppose that Ms. Butterfly had correctly forecasted the price at which she sold her bond and that she hedged her investment against currency risk. What would have been her return in yen? Note: For all requirements, do not round intermediate calculations. Enter your answers as a percent rounded to 2 decimal places.
