Revised Shockley, Chapter 11 Problems:
Problem 1:
Problem 2:
NPV = -205,678.66 = [10,071.49 – 4,596]*10.157781 – [1,238.78*18.4476]*13.383451
Problem 3:
-4,000 = [10,071.49 – 4,596]*10.157781 – [1,238.78*EXCH]*13.383451 –
Problem 4:
Jan-09
Dec-09
21.250
24.478
16.015
18.448
12.069
13.903
10.478
EXCH = 3.45 (approximately)…consequently, the first seven exchange rates in the Dec–
Dec-09
0
0
0
0
0
0
0
1,318.78
15,405.36
26,008.35
34,007.09
40,044.19
44,576.25
48,009.12
50,579.54
Problem 5:
Value of keeping business open for six more months (use equation 11.7 and get exchange
Problem 6:
Value of option: (0.645*(-4,000) + 0.355*(-871)) ÷ 1.063 = -2,717.97
Value of keeping business open for six more months (use equation 11.7 and get exchange
Total value of keeping business open: -2,717.97 + 214.31 = -2,503.66
Problem 7:
Value of option: (0.645*(-871) + 0.355*(12,935)) ÷ 1.063 = 3,791.28
Value of keeping business open for six more months (use equation 11.7 and get exchange
Total value of keeping business open: 3,791.28 + 955.36 = 4,746.64
Problem 8:
Value of keeping business open for six more months (use equation 11.7 and get exchange
Problem 9:
Value of keeping business open for six more months (use equation 11.7 and get exchange
rate from Figure 11.10):