1. Interest rates in the US are 2.9% and 9.4% in Canada._You borrow US$456,123 to invest. How many Canadian dollars can be invested? The current exchange rate is US$1.00 = C$1.2772. What is the total return in Canadian dollars? The investment takes 90 days. What is the total return in US dollars using the new exchange rate? The new exchange rate is US$1.00 = C$1.2766. 2. What is the loan payment? What is the return in US$ after paying the loan? What is the percent return in US$? Use this information to answer questions 3-4. A US company is considering building a factory and expanding to Europe. The company makes cellphones._The company hires you to analyze the opportunity._What advice would you give the company for these decisions? 3. The company wants to minimize its investment and maximize its return._How can the company achieve this with the items in the capital budget? 4. Would you recommend the company expand to Europe? Why or why not? 5. Cross exchange transactions can be profitable.__This involves changing one currency to another to another and comparing the final result to the initial investment. It is possible to make a profit by trading currencies._What is the profit or loss from these transactions starting with $54,321? What does this indicate? The exchange rates are the following. $1.00 = .8209 1.00 =137.4907 103.4730 = $1.00 dollar to euro euro to yen yen to dollar 1. Interest rates in the US are 2.9% and 9.4% in Canada._You borrow US$456,123 to invest. How many Canadian dollars can be invested? The current exchange rate is US$1.00 = C$1.2772. What is the total return in Canadian dollars? The investment takes 90 days. What is the total return in US dollars using the new exchange rate? The new exchange rate is US$1.00 = C$1.2766. 2. What is the loan payment? What is the return in US$ after paying the loan? What is the percent return in US$? Use this information to answer questions 3-4. A US company is considering building a factory and expanding to Europe. The company makes cellphones._The company hires you to analyze the opportunity._What advice would you give the company for these decisions? 3. The company wants to minimize its investment and maximize its return._How can the company achieve this with the items in the capital budget? 4. Would you recommend the company expand to Europe? Why or why not? 5. Cross exchange transactions can be profitable.__This involves changing one currency to another to another and comparing the final result to the initial investment. It is possible to make a profit by trading currencies._What is the profit or loss from these transactions starting with $54,321? What does this indicate? The exchange rates are the following. $1.00 = .8209 1.00 =137.4907 103.4730 = $1.00 dollar to euro euro to yen yen to dollar
