Market observes the “exchange rates” as of today:($1/$0)=0.95 , ($2/$0)=0.87   1. What is the implied interest rate between time t=0 and t=2 ?   2. Now there is a project with three certain cashflows: CF0=−$10MM CF1=$5MM CF2=$7MM What is NPV0?   3. How much is CF1 worth at t=2?

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A contingent liability can be defined as a liability the occurrence of which is dependent upon the happening of an uncertain future event. It is generally recorded in the books only when the amount of liability can be reasonably estimated and the contingency is likely to occur shortly.