Question
Annies aunt, Coseta, also invested in the same venture, but did not hedge. Ex post, she bought USD at the following spot exchange rates in
Annies aunt, Coseta, also invested in the same venture, but did not hedge. Ex post, she bought USD at the following spot exchange rates in years one through three: $0.05, $0.04, and $0.03.
9) What was her USD cash inflow for year 1?
a. $1,050,000
b. 1,400,000
c. 960,000
d. 840,000.
10) What was her USD cash inflow for year 2?
a. $1,050,000
b. 1,400,000
c. 960,000
d. 840,000
e. 630,000.
11) What was her USD cash inflow for year 3?
a. $1,050,000
b. 1,400,000
c. 960,000
d. 850,000
e. 630,000
12) Which of the following NPVs would Coseta have earned, if she also requires a 20% rate of return?
A) -$1,419,578
B) -$1,299,263
C) -$1,410,000
D) -$1,539,371
E) -$1,177,083.
13) Which IRR would Coseta have earned?
a. 18%
b. 12
c. -5.67
d. -8.93
e. 7.77.
14) Coseta would have been better-off placing her $3 million in a U.S. bank savings account.
A) TRUE
B) FALSE
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