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Suppose that the U.S. firm Halliburton buys construction equipment from the Japanese firm Komatsu at a price of ¥250 million. The equipment is to be delivered to the United States and paid for in one year. The current exchange rate is ¥97 = $1. The current interest rate on one-year U.S. Treasury bills is 8%, and on one-year Japanese government bonds the interest rate is 6%. a. If Halliburton exchanges dollars for yen today and invests the yen in Japan for one year, it will need $☐ to exchange today in order to have ¥250 million in one year. (Round your response to the nearest dollar.)

Suppose that the U.S. firm Halliburton buys construction equipment from the Japanese firm Komatsu at a price of ¥250 million. The equipment is to be delivered to the United States and paid for in one year. The current exchange rate is ¥97 = $1. The current interest rate on one-year U.S. Treasury bills is 8%, and on one-year Japanese government bonds the interest rate is 6%. a. If Halliburton exchanges dollars for yen today and invests the yen in Japan for one year, it will need $☐ to exchange today in order to have ¥250 million in one year. (Round your response to the nearest dollar.)

Managerial Economics: Applications, Strategies and Tactics (MindTap Course List)
Managerial Economics: Applications, Strategies and Tactics (MindTap Course List)
14th Edition
ISBN:9781305506381
Author:James R. McGuigan, R. Charles Moyer, Frederick H.deB. Harris
Publisher:James R. McGuigan, R. Charles Moyer, Frederick H.deB. Harris
Chapter6: Managing In The Global Economy
Section: Chapter Questions
Problem 12E
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Suppose that the U.S. firm Halliburton buys construction equipment from the Japanese firm Komatsu at a price of ¥250 million. The equipment is to be delivered to the United States and paid for in one year. The current exchange rate is ¥97 = $1. The current interest rate on one-year U.S. Treasury bills is 8%, and on one-year Japanese government bonds the interest rate is 6%. a. If Halliburton exchanges dollars for yen today and invests the yen in Japan for one year, it will need $☐ to exchange today in order to have ¥250 million in one year. (Round your response to the nearest dollar.)
Transcribed Image Text:Suppose that the U.S. firm Halliburton buys construction equipment from the Japanese firm Komatsu at a price of ¥250 million. The equipment is to be delivered to the United States and paid for in one year. The current exchange rate is ¥97 = $1. The current interest rate on one-year U.S. Treasury bills is 8%, and on one-year Japanese government bonds the interest rate is 6%. a. If Halliburton exchanges dollars for yen today and invests the yen in Japan for one year, it will need $☐ to exchange today in order to have ¥250 million in one year. (Round your response to the nearest dollar.)
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