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1. A final payment of 28 MN CAD needs to be made by your firm in next 6 Months for completing a construction project in
1. A final payment of 28 MN CAD needs to be made by your firm in next 6 Months for completing a construction project in Canada. For the given FX and IR quotations in Table A, the expected spot rates are provided in Table B. Table A: Present spot rate Six-month forward Canadian six- U.S. six-month rate month interest rate interest rate C$ 1.4000/USS C$ 1.4200/US$ 13% per annum 10% per annum Highest expected rate C$1.4000/USS Table B Most likely rate C$1.4300/US$ Lowest expected rate C$1.4500/US$ A the moment, your firm doesn't have any surplus dollar reserves but you expect a cash inflow owing to a tax refund due in next 6 months. If your firm's targeted WACC is 20 percent, then mathematically figure out the alternatives available for making the payment and the reasons for cach of the choice made. 151
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