Archives: Solution Manual

Assumptions Values Face amount of sale € 700,000 Maturity, days 90 Problem 16.1 Nikken Microsystems (A) Assume Nikken Microsystems has sold Internet servers to Telecom España for €700,000. Payment is due in 3 months and will be made with a […]

3 Net income available for distribution 2,448,000$ 1,870,000$ 4 Retained earnings – – 5 Distributed earnings 2,448,000 1,870,000 6 Distribution to U.S. parent company 2,448,000 1,870,000 7 Withholding taxes on dividends 367,200 – 8 Net remittance to U.S. parent 2,080,800$ […]

a. What is the dollar cost of this debt if the pound depreciates from $2.0260/£ to $1.9460/£ over the year? b. What is the dollar cost of this debt if the pound appreciates from $2.0260/£ to $2.1640/£ over the year? […]

a. Ganado’s cost of equity b. Ganado’s cost of debt c. Ganado’s weighted average cost of capital Domestic International Assumptions CAPM ICAPM Ganado’s beta, β1.05 0.85 a) Ganado’s cost of equity 9.270% 7.340% ke = krf + ( km – […]

a. How much should Mauna Loa borrow in yen? year hence has already been covered by borrowing both principal and interest up-front. Note: Mauna Loa should not borrow 250 million yen to cover only its balance sheet exposure. Such a […]

Translated Translated Euros Exchange Rate Accounts Exchange Rate Accounts Assets Statement (US$/euro) US dollars (US$/euro) US dollars (2,536,800)$ 136,800 a. The translation gain (loss) is ————————————————-————————————————-————–> (2,400,000)$ b. The translation gain (loss) for the year is added to the balance […]

Assumptions Values Account recievable in 90 days (€) € 1,560,000 Hedged Hedged If Chronos Time Pieces …… the Minimum the Maximum Proportion of exposure to be hedged 70% 120% Total exposure (€)€ 1,560,000 € 1,560,000 hedged proportion 70% 120% Minimum […]

Spot rate, ¥/$ ¥111.40/$ 30-day forward rate, ¥/$ ¥111.00/$ Assumptions Values BioTron’s 30-day account receivable, Japanese yen 12,500,000 Spot rate, ¥/$ 111.40 30-day forward rate, ¥/$ 111.00 90-day forward rate, ¥/$ 110.40 180-day forward rate, ¥/$ 109.20 Numata’s WACC 8.850% […]

Assumptions Rate Values Initial spot rate, 1999 (Sucre/$) S1 5,000 Problem 9.1 Ecuadorian Hyper-Inflation The Ecuadorian sucre (S) suffered from hyper-inflationary forces throughout 1999. Its value moved from S5,000/$ to S25,000/$. What was the percentage change in its value? Ending […]

Assumptions 3-Month T-Bill 6-Month T-Bill a. Discount on sale $6.07 $23.26 b. Simple yield 0.0607% 0.2331% c. Annualized yield 0.2432% 0.4668% Simple yield is found by dividing the discount (the dollar return to the investor on maturity) by the price […]

British Pound Futures, US$/pound (CME) Contract = 62,500 pounds Open Maturity Open High Low Settle Change High Interest March 1.4246 1.4268 1.4214 1.4228 0.0032 1.4700 25,605 June 1.4164 1.4188 1.4146 1.4162 0.0030 1.4550 809 a. If Tony buys 5 June […]

Value SFr. Equivalent Arbitrage funds available $1,000,000 SFr. 1,281,000 Spot exchange rate (SFr./$) 1.2810 START U.S. dollar interest rate (3-month) END 4.800% 1,000,000$ → → 1.0120 → → 1,012,000.00$ 1,012,029.16$ ↓29.16$ ↓ ↑ ↓ ↑ ↓ ↑ Spot (SFr/$) —————> […]

a. How many dollars might Theresa expect to need one year hence to pay for her 30-day vacation? b. By what percent has the dollar cost gone up? Why? Assumptions Value Charge for suite plus meals in Malaysian ringgit (RM) […]

Spot rate on the GTQ/€ cross rate GTQ 10.5799/€ Spot rate on the €/reais cross rate €0.4462/R$ Assumptions Values a. What is the R$/GTQ cross rate? Cross rate (R$/GTQ) 4.72 Reais/GTQ = R$/€ x €/GTQ Converting your reais into quetzals […]

Assumptions Value Share price, P1 12.00$ Share price, P2 15.00$ Dividend paid, D2 –$ a. If the company paid no dividend (plugging zero in for the dividend): Problem 4.1 Emaline Returns If the share price of Emaline, a New Orleans-based […]

Australia’s Current Account Use the following data from the International Monetary Fund to answer questions 3.1 through 3.4. 3.1 What is Australia’s balance on goods? 3.2 What is Australia’s balance on services? 3.3 What is Australia’s balance on goods and […]

Assumptions Values Buy a US dollar in Brussels for (€/$) 0.7600 Problem 2.1 Chantal DuBois in Brussels Chantal DuBois lives in Brussels. She can buy a U.S. dollar for €0.7600. Christopher Keller, living in New York City, can buy a […]

After completing the table below, answer the following questions. a. Which city in the table is truly the cheapest date? b. Which city in the table is the most expensive-cheap date? c. If the exchange rate in Moscow on the […]