Corporate Finance
Corporate Finance
3rd Edition
ISBN: 9780132992473
Author: Jonathan Berk, Peter DeMarzo
Publisher: Prentice Hall
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Chapter 2.3, Problem 2CC

What is the diluted earnings per share?

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Suppose that the treasurer of IBM has an extra cash reserve of $100,000,000 to invest for six months. The six-month interest rate is 9 percent per annum in the United States and 8 percent per annum in Germany. Currently, the spot exchange rate is €1.07 per dollar and the six-month forward exchange rate is €1.05 per dollar. The treasurer of IBM does not wish to bear any exchange risk. Where should they invest to maximize the return? Required: The maturity value in six months if the extra cash reserve is invested in Germany:

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