The spot exchange rate for the Thai bhat is 33.14 bhat to the dollar. The Hotel Grand Chancellor Hobart will be able to repatriate profits from its luxury resort hotel in Phuket in five years. It has estimated the five-year forward rate at 38 bhat to the dollar. The risk-free rate in the Australia is 4% and Hotel Grand Chancellor Hobart uses an 11% risk premium for investments of this type. If the expected accumulated profits after five years are 100 million bhat, what is the present value in Australian dollars?

The spot exchange rate for the Thai bhat is 33.14 bhat to the dollar. The Hotel Grand Chancellor Hobart will be able to repatriate profits from its luxury resort hotel in Phuket in five years. It has estimated the five-year forward rate at 38 bhat to the dollar. The risk-free rate in the Australia is 4% and Hotel Grand Chancellor Hobart uses an 11% risk premium for investments of this type. If the expected accumulated profits after five years are 100 million bhat, what is the present value in Australian dollars?

International Financial Management

14th Edition

ISBN:9780357130698

Author:Madura

Publisher:Madura

Chapter20: Short-term Financing

Section: Chapter Questions

Problem 4ST

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