Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Apple Inc. is a U . S . - based company, that designs, manufactures, and markets mobile communication and media devices, and personal computers. It

Apple Inc. is a U.S.-based company, that designs, manufactures, and markets mobile communication and media devices, and personal computers. It also sells various related software, services, accessories, and third-party digital content and applications. The company offers iPhone, a line of smartphones; iPad, a line of multi-purpose tablets; and Macr a line of desktop and portable personal computers, as well as iOS, macOS, watchOS, and tvOS operating systems. On September 30, Apple sold inventory to Yara International, a Norwegian company. The inventory was priced at NOK 46.65 million and payment is due in 180 days. Apple's multinational finance team collected the following currency and market quotes. Apple forecasts the Norwegian Krone (NOK) will be at about $0.1125? NOK in 180 days.
Current spot rate ($/NOK)
$0.1095
180-day forward rate ($/NOK)
$0.1105
Apple's WACC
4.500%
180-day dollar interest rate
2.000%
180-day krone interest rate
1.250%
180-day dollar borrowing rate
4.000%
180-day krone borrowing rate
3.000%
What would be the value of Apple's investment at the end of 180 days if it uses the proceeds from the money market hedge to invest in a US dollar investment? (rounded to the nearest dollar)
US $5,083,012
US $5,154,825
US $5,058,581
US $5,145,920
US $5,058,095
image text in transcribed

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Multinational Business Finance

Authors: David K. Eiteman, Arthur I. Stonehill, Michael H. Moffett

6th Edition

0201538997, 978-0201538991

More Books

Students also viewed these Finance questions

Question

BPR always involves automation. Group of answer choices True False

Answered: 1 week ago