Reference no: EM131182106
1. International Machinery Company (IMC) is a Swedish multinational manufacturing company. Currently, IMC's financial planners are considering undertaking a 1-year project in the United States. The project's expected dollar-denominated cash flows consist of an initial investment of $2,850 and a cash inflow the following year of $3,550. IMC estimates that its risk-adjusted cost of capital is 15%. Currently, 1 U.S. dollar will buy 6.3 Swedish kronas. In addition, 1-year risk-free securities in the United States are yielding 6%, while similar securities in Sweden are yielding 5%.
a. If the interest parity holds, what is the forward exchange rate of Swedish krona per U.S. dollar? Round your answer to 2 decimal places. Do not round intermediate calculations.
-------Swedish krona per U.S. dollar
b. If IMC undertakes the project, what is the net present value and rate of return of the project for IMC in home currency? Round your answer to 2 decimal places. Do not round intermediate calculations.
NPV: ---------- Swedish kronas
Rate of return: -------- %
2. Quantitative Problem: In the spot market, 2.18 Brazilian real can be exchanged for 1 U.S. dollar. An Apple iPad Air costs $500 in the United States. If purchasing power parity (PPP) holds, what should be the price of the same iPad Air in Brazil? Round your answer to the nearest whole number. Do not round intermediate calculations.
------reals
|
Considering the sale of a new sound board
: Rolston Music Company is considering the sale of a new sound board used in recording studios. The new board would sell for $26,500, and the company expects to sell 1,500 per year. The company currently sells 2,000 units of its existing model per year..
|
|
How company identify in your research can use the cash flow
: Next, evaluate how the company identified in your research can use the cash flow statement to project efficient uses of the cash hoard it has accumulated.
|
|
What is the equilibrium price of electricity
: What is the equilibrium price of electricity? The equilibrium quantity? Label this point on your graph.
|
|
Describe four advanced boot options
: When a driver is verified, a unique digital signature is incorporated into it in a process called and File System can be used to encrypt individual files on a file system.
|
|
Project expected dollar-denominated cash flows consist
: International Machinery Company (IMC) is a Swedish multinational manufacturing company. Currently, IMC's financial planners are considering undertaking a 1-year project in the United States. The project's expected dollar-denominated cash flows consis..
|
|
Explain the given statement
: Explain the given statement. - It has been said that the rules for success are written outside the organization but competitive advantage must be found within the organization.
|
|
Derivatives to implement your strategy
: How would you use derivatives to implement your strategy? How would you implement the same trading idea without using forwards or futures contracts?
|
|
Review the new listings that populate
: Review the new listings that populate.- Create your frequency distribution- Generate a histogram from your frequency distribution.
|
|
Expected to grow at an annual rate
: Tom's Company are expected to grow at an annual rate of 14% over the next 5 years and then slow to a constant rate of 10% per year. Tom's currently pays a dividend of $0.36 per share. What is the value of Tom's stock to an investor who requires a 16%..
|