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a US company burrows Mexican pesos for one uear at 30%. during the year peso
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- A US dollar costs 1.30 Canadian dollar (CAD), but the same dollar can be purchased for 25.0 Mexican peso (MXN). If the MXN/CAD exchange rate is quoted as 18.0, there is an opportunity for triangular arbitrage. Starting from a dollar, the arbitrager will first buy (CAD MXN) with the dollar to obtain blanks and explain your answer." % of riskless arbitrage profit for each round. Fill inLeader Inc. has the following foreign financing: The company borrowed US$350,000, for five years, when US$1.00 = Cdn$1.02. The exchange rate at the end of the first year is US$1.00 = Cdn$1.03, and at the end of the second year is US$1.00 = Cdn$0.99. Assume the debt was raised at par. Ignore interest. Required: How much exchange gain or loss would be shown in earnings in the second year? (Do not round intermediate calculations.) Exchange Earnings in second year Gain LossAndrew purchased $1 million worth of euro-denominated one-year CD's that pay 10% annually. The current spot rate of US dollars for euros is $1.10/1euro. The dollar weakens against the euro, and the spot rate at the end of the year is $1.20/1euro. What is Andrews gain in dollars and % at the end of the year? Give typing answer with explanation and conclusion
- Bumpas Enterprises purchases $4,562,500 in goods per year from its sole supplier on terms of 4/10, net 65. If the firm chooses to pay on time but does not take the discount, what is the effective annual percentage cost of its non-free trade credit? (Assume a 365-day year.) a. 21.98% b. 27.65% c. 29.49% d. 31.12% e. 28.46%Lafayette Group (U.S.). The Lafayette Group, a private equity firm headquartered in Boston, borrows £5,000,000 for one year at 7.375% interest. a. What is the dollar cost of this debt if the pound depreciates from $2.0260 = £1.00 to $1.9460 = £1.00 over the year? b. What is the dollar cost of this debt if the pound appreciates from $2.0260 = £1.00 to $2.1640 = £1.00 over the year? a. What is the dollar cost of this debt if the pound depreciates from $2.0260 = £1.00 to $1.9460 = £1.00 over the year? % (Round to two decimal places.) b. What is the dollar cost of this debt if the pound appreciates from $2.0260 = £1.00 to $2.1640 = £1.00 over the year? % (Round to two decimal places.). AU.S. bank can earn 6% on dollar loans or 8% on pound denominated loans to British concerns. The bank currently has $500 million in dollar loans and British pound loans equivalent to $400 million. The loans are funded by dollar denominated CDs paying 4%. All loans and CDs are on single payment terms. The current spot rate for pounds is S1.8604 and the one year forward rate is $1.8405.TWhat is the bank's spread if they fully hedge their exposure to pounds?
- If the British pound depreciates against the Swiss franc by 9.7% over a particular period, then over that same period the Swiss franc will have appreciated against British pound by what percentage? a. 8.39% b. 10.74% O c. 9.52% d. 8.84% e. 9.70%Assume that Stevens Point Co. has net payables of 200,000 Singapore dollars in 90 days. The spot rate of the S$ is US$0.71/1S$, and the Singapore periodic interest rate is 1.5% over 90 days (annual rate is 6% per year, so periodic rate is 1.5% per 90 days). Assume US periodic interest rates of 1% over 90 days or (annual rate is 4%, so periodic rate is 1% per 90 days). If the U.S. firm could implement a money market hedge, what is the cost of the payables in US dollars in 90 days using a money market hedge? Assume borrowing and lending rates are the same for simplicity. Be precise.Royal Company (a U.S. based company) has foreign branch in Great Britain. The foreign branch generates £5,000,000 pretax income. October 15, branch sends £1,000,000 to Royal. Income tax rate in Great Britain is 15%. Taxes are paid to Great Britain’s government on December 31. Assume a tax rate of 21% in the U.S. Here are relevant exchange rates: US$ to £ 1/1 $1.2 10/15 $1.3 12/31 $1.4 Average $1.35 Determine the amount (in U.S. dollars) of U.S. taxable income, U.S. foreign tax credit, and U.S. tax liability related to the foreign branch.
- After all foreign and U.S. taxes, a U.S. corporationexpects to receive 2 pounds of dividends per share from a British subsidiary this year.The exchange rate at the end of the year is expected to be $1.29 per pound, and the poundis expected to depreciate 5% against the dollar each year for an indefinite period. The dividend(in pounds) is expected to grow at 10% a year indefinitely. The parent U.S. corporationowns 10 million shares of the subsidiary. What is the present value in dollars of its equityownership of the subsidiary? Assume a cost of equity capital of 11% for the subsidiary.Honesto imported a harvester from the U.S. with a total cost of 1,100,000 before Customs Duties. The importation is subject to 10% Customs duties. What is the VAT on importation?* a. P 158,400 b. P 145,200 c. P 129,600 d. P 0