Future exchange rate between euro and dollar

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Reference no: EM132057932

1. The euro is currently trading at 1.20 euros per dollar. The interest rate on the US Treasury Bill is 0.024 and the risk free interest rate in Europe is 0.023. What is the arbitrage free future exchange rate between the euro and the U.S. dollar for two years in the future in euros per dollar?

2. Ebling Inc. finances with 0.1 fraction debt, 0.1 fraction preferred and the remaining common stock. Ebeling's before tax cost of debt is 0.04, it cost of preferred stock is 0.08, and its cost of common stock is 0.18. If Ebeling is subject to a 0.3 fraction corporate income tax, what is the company's Weighted Average Cost of Capital?

Reference no: EM132057932

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