YEAR O YEAR 1 YEAR 2 YEAR 3 YEAR 4 Total S$ cash flows remitted after withholding taxes S$7500000 S$7500000 S$7500000 $$7500000 Hedged S$ cash flows $4800000 S$4800000 s$4000000 $$4000000 Unhedged S$ cash flows Salvage Value Forward rate of S$ $$22000000 0.49 0.49 0.49 0.49 Expected Future Spot rate of S$ 0.51 0.50 0.49 0.48 Hedged cash flows to parent Unhedged cash flows to parent Total cash flows to parent Initial Investment by parent $15,000,000 The above information is for a firm trying to hedge a portion of its expected cash inflows denominated in Singapore Dollars What is the NPV if the discount rate is 14% about $2.01 million about $2.54 million about $1.99 million about $3.21 million
YEAR O YEAR 1 YEAR 2 YEAR 3 YEAR 4 Total S$ cash flows remitted after withholding taxes S$7500000 S$7500000 S$7500000 $$7500000 Hedged S$ cash flows $4800000 S$4800000 s$4000000 $$4000000 Unhedged S$ cash flows Salvage Value Forward rate of S$ $$22000000 0.49 0.49 0.49 0.49 Expected Future Spot rate of S$ 0.51 0.50 0.49 0.48 Hedged cash flows to parent Unhedged cash flows to parent Total cash flows to parent Initial Investment by parent $15,000,000 The above information is for a firm trying to hedge a portion of its expected cash inflows denominated in Singapore Dollars What is the NPV if the discount rate is 14% about $2.01 million about $2.54 million about $1.99 million about $3.21 million
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
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Transcribed Image Text:YEAR O
YEAR 1
YEAR 2
YEAR 3
YEAR 4
Total S$ cash flows remitted after withholding taxes
S$7500000 S$7500000 S$7500000 S$7500000
Hedged S$ cash flows
S$4800000 S$4800000 S$4000000 $$4000000
Unhedged S$ cash flows
Salvage Value
Forward rate of S$
S$22000000
0.49
0.49
0.49
0.49
Expected Future Spot rate of S$
0.51
0.50
0.49
0.48
Hedged cash flows to parent
Unhedged cash flows to parent
Total cash flows to parent
Initial Investment by parent
$15,000,000
The above information is for a firm trying to hedge a portion of its expected cash inflows denominated in Singapore Dollars (S$).
What is the NPV if the discount rate is 14%
about $2.01 million
about $2.54 million
about $1.99 million
about $3.21 million
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