1,A MNC can ensure a full protection against translation exposure if it uses:

a, money market hedge.

b, forward hedge.

c, futures hedge.

d, none of the above can ensure full protection.

2,An MNC is considering establishing a two-year project in New Zealand with a $30 million initial investment. The firm's cost of capital is 12%. The required rate of return on this project is 18%. The project is expected to generate cash flows of NZ$12 million in Year 1 and NZ$30 million in Year 2, excluding the salvage value. Assume no taxes, and a stable exchange rate of $.60 per NZ$ over the next two years. All cash flows are remitted to the parent. What is the break-even salvage value?

Hint: use this formula below

Break-even

salvage

= [Initial outlayPV of cash flows] (1 + k)^m

value

a, about NZ$11 million.

b, about NZ$15 million.

c, about NZ$19 million.

d, about NZ$22 million.