Should you invest in an international project in Mexico with the folloWing CF Year 0 = MXN -250,000 CF Year 1 = MXN 125,000 CF Year 2 = MXN 150,000 %3D %3D %3D WACC 8% Spot Rate USD/MXN 20.9205 Years U.S. Bond U.S. Bond 1.75% 2.05% 2. Mexico Bond 1.25% Mexico Bond 1.35% 2. O Yes, the NPV in USD is $157.95
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- Mr liam want to invest Us$700,000 on mexico. interest rate per year inflation rate per year US 1.49% 1.27% Mexico 6.47% 3.38% Nominal Exchange Rates -Spot 19.780 Pesos=US $1-One-year forward 19.790 Pesos=US $1 The future spot exchange rate(St) is 19.650 Pesos=US $1. Calculate the arbitrage portfolio and assess how to construct the arbitrage portfolio based on the calculations.4 Assume that Intel has net receivables of SGD1,500,000 in 90 days. The spot rate of the Singapore Dollar (SGD) is USD0.7300, and the Singapore interest rate is 12.00% per annum and US interest rate is at 10.00% per annum. Suggest how the U.S. firm could implement a money market hedge. (Show your strategy and workings).Give typing answer with explanation and conclusion Currency Exchange Question: (Currency Per USD) If Mexican Peso Rate (MXN)=17.996867 If Singapore Dollar Rate (SGD)=1.33511 A Mexican investor wishes to buy 10 SGD bonds - each selling for SGD135,422. How much will the investor need in MXN to buy these?
- Assume a risk-free asset in the U.S. is currently yielding 2.7 percent while a Canadian risk-free asset is yielding 2.8 percent and the current spot rate is Can$1.2849 = $1. What is the approximate 6-month forward rate if interest rate parity holds? Can$1.2855 Can$1.2838 Can$1.2843 Can$1.2862 Can$1.2836Assume the following information: U.S. investors have $1,000,000 to invest: 1-year deposit rate offered by U.S. banks = 10% 1-year deposit rate offered on Swiss francs = 13.5% 1-year forward rate of Swiss francs = $1.26 Spot rate of Swiss franc = $1.30 Does IRP hold? Is there an arbitrage opportunity?Assume the following information: Spot rate of Mexican peso $0.100 1-year forward rate of Mexican peso $0.099 1-year Mexican interest rate 6% 1-year U.S. interest rate 5% 1. Given this information, what would be the yield (percentage return) to a U.S. investor who used covered interest arbitrage? (Assume the investor invests $1,000,000.) 2. What market forces would occur to eliminate any further possibilities of covered interest arbitrage?
- Assume that you believe that purchasing power parity (PPP) holds. You are an Australian investor with 125,000 AUD to invest for the next year. The current exchange rate is AUD/USD 0.73. The expected inflation in the U.S. is 1.5% while the expected inflation in Australia is 3.5%. Current interest rates in the U.S. are 1% and in Australia 4%. What is your expected yield on a U.S. investment?Suppose that you know the following (i) New Zealand 3 month Treasury bills yield 10% per annum(ii) Japanese 3 month Treasury bills yield 8% per annum(iii) the spot exchange rate is ¥80 = $1(iv) the 3 month forward exchange rate is ¥77.5 = $1 The return to investing NZ$1 in New Zealand for 3 months is NZ$_____ (use 3 d.p. and include the original $1 invested in the value of the return) The return to investing NZ$1 in Japan for 3 months is NZ$_____ (use 3 d.p. and include the original $1 invested in the value of the return) The result of this is that we would expect the spot value of the $NZ to (Select: rise, fall, remain unchanged) and the forward value of the $NZ to (Select: rise, fall, remain unchanged).Your US-based firm is evaluating a project in France with cash flows in Euros. Which of the following rates should you use as a risk-free rate? US Treasury- 3 month 0.50% US Treasury- 10 year 2.90% US Treasury Inflation-Indexed- 10 year -0.12% France Government Debt- 10 year 1.37% Germany Government Debt- 10 year 0.85% AAA-rated Euro Area Central Government Bond- 10 year 0.92%