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Eurobike, based in Germany will need TL2 mn in 2 years to pay for imports. The annual interest rate in the next 2 years is

  1. Eurobike, based in Germany will need TL2 mn in 2 years to pay for imports. The annual interest rate in the next 2 years is 3% in Europe and 10% in Turkey. Assume interest rate parity holds.
  1. Determine the appropriate forward premium or discount on TL? (7.5 points)

Calculate the s Eurobike will need in 2-years to make the payment, assuming spot rate of EURTL is 7?

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