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Excel Online Structured Activity: Foreign Investment Analysis 1-year forward exchange rate, U.S. dollars required to buy 1 peso $0.08 Annual depreciation rate of peso against
Excel Online Structured Activity: Foreign Investment Analysis
| 1-year forward exchange rate, U.S. dollars required to buy 1 peso | $0.08 |
| Annual depreciation rate of peso against dollar | 3.00% |
| Peso-denominated dividend annual growth rate | 7.00% |
| Number of common shares owned | 5,000,000 |
| Cost of equity, rs | 15.00% |
| Step 1: Convert Pesos to Dollars | |
| Year 1 dividends in dollars, D1 | |
| Step 2: Find the Growth Rate in Dollar-Denominated Divdiends: | |
| Growth in exchange rate | |
| Growth rate in dollar-denominated dividends | |
| Step 3: Calculate the Per-Share Stock Price in Dollars: | |
| P0 | |
| Step 4: Calculate the Dollar Value of the Equity Investment: | |
| Value of equity investment, in dollars |
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Intermediate Accounting
Authors: kieso, weygandt and warfield.
IFRS Edition
978-1118443965, 1118800532, 9781118800539, 978-0470873991
