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HoleSale Inc, USA exports manhole covers to Japan and Germany. Over the next six month, the company anticipates sales of 14,880 units to Japan and 961 units to Germany. The price of manhole covers is set at JPY 1,199 and EUR 166 in Japan and Germany respectively. The following information is given: - The standard deviation of the JPY/USD exchange rate is 5 - The standard deviation of the EUR/USD exchange rate is 0.09 - The correlation of the JPY/USD and EUR/USD exchange rate is 0 - The standard deviation of the EUR/USD six-month forward rate is 0.09 HoleSale Inc. is going to use the EUR/USD forward market to hedge all currency risk across countries to which it sells its product by booking a single forward contract that minimises the company's risk. How many units of this contract should the firm buy/sell? Round your answer to zero decimal place.
Inventory Management Calculate the average investment in inventory for each of the following situations. Assume a 365-day year. The firm's annual sales were $16 million, its gross profit margin was 34%, and its average age of inventory is 49 days.
Assume that interest rate parity holds. In the spot market 1 Japanese yen = $0.01, while in the 180-day forward market 1 Japanese yen = $0.0105. 180-day risk-free securities yield 1.35% in Japan. What is the yield on 180-day risk-free securities in t..
Halestorm Corporation’s common stock has a beta of 1.15. Assume the risk-free rate is 5 percent and the expected return on the market is 12.5 percent. Required: What is the company’s cost of equity capital?
Bui Corp. pays a constant $13.30 dividend on its stock. The company will maintain this dividend for the next seven years and will then cease paying dividends forever. If the required return on this stock is 10 percent, what is the current share price..
Louise Manufacturing uses 2,600 switch assemblies per week and then reorders another 2,600. The relevant carrying cost per switch assembly is $10.50, and the fixed order cost is $1,300. What are the current carrying costs? Calculate the economic orde..
Gold Rush Mining is evaluating when to open a gold mine. The mine has 48,800 ounces of gold left that can be mined, and mining operations will produce 6,100 ounces per year. The required return on the gold mine is 11 percent, and it will cost $34.1 m..
You want to create a portfolio equally as risky as the market, and you have $500,000 to invest. Information about the possible investments is given below: How much must you invest in Stock C?
In order to fund her retirement, Michele requires a portfolio with an expected return of 0.11 per year over the next 30 years. She has decided to invest in Stocks 1, 2, and 3, with 25 percent in Stock 1, 50 percent in Stock 2, and 25 percent in Stock..
A stock has an expected return of 15.5 percent, a beta of 1.50, and the expected return on the market is 12.1 percent. What must the risk-free rate be?
Five million shares issued with a current market price of 11. Equity holders require a 8% return. $10 million face value of corporate bonds outstanding. These bonds pay an annual coupon of 6% and currently trade at a yield to maturity of 6%.
Beasley Worldwide Data Destruction (BWDD) purchases a new computing center for $200million. They estimate a life of 5 years and a salvage value of $40 million. BDWW uses MACRSdepreciation in the five year category. They also estimate revenue at $100 ..
Canyon Tours showed the following components of working capital last year: Beginning End of Year Accounts receivable $26,200 $24,100 Inventory 13,100 14,700 Accounts payable 15,600 18,700 a. What was the change in net working capital during the year?..
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