An Indonesian corporation$-$with revenues and operating costs in Indonesia$-$rather than borrowing the Indonesian Rupee at a rate of $9\mathrm{.}75\%,$ has chosen to borrow U$.$S dollars at an interest rate of $5\%.$ The borrowing of the U$.$S dollars constitutes $100\%$ of the firm's debt and the firm is expected to have a rate of return on assets of $9\%$ and a financial leverage of $(\frac{B}{E})=4.$ Answer the following $3$ questions;

Question $1)$: For what decrease $($or $\%$ loss$)$ in assets, will the firm's net worth become $0?$

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Question $2)$: What will the rate of return on equity be if the dollar appreciates in value vs$.$ the Indonesian Rupee by $0\%?$

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Question $3)$: What will the rate of return on equity be if the dollar appreciates in value vs$.$ the Indonesian Rupee by $50\%?$

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Question $4)$: What percent of your losses comes from operations? And what percent comes from changes in liabilities?

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Question $5)$: If the rate of return on equity is $-100\%,$ what will Net Worth of the company be$?$

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If the annual interest rate in the USA and Eurozone are respectively $i_S=4\%$ and $i_{lon}=5\%$ and in the foreign exchange market the spot rate of dollars per euro is $e_0(\frac{\text{\$}}{}$lon$)=1\mathrm{.}10.$ If you can get a one year forward rate at $Fe(\frac{\text{\$}}{}$lon$)=1\mathrm{.}05,$ answer the following $3$ questions;

Question $6)$: What is the one year forward $g_{lon}$ discount $($or premium$)$ of the euro?

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Question $7)$: What is the effective cost of borrowing euros if the forward market is used?

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Question $8)$: Estimate the approximate rate of return$-$ on any amount invested $-$ from Covered Interest Arbitrage.

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