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Geneva Manufacturing Co. is a Swiss multinational manufacturing company, Currently, Geneva's financial planners are considering undertaking a one-year project in the United States. The project's

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Geneva Manufacturing Co. is a Swiss multinational manufacturing company, Currently, Geneva's financial planners are considering undertaking a one-year project in the United States. The project's expected dollar-denominated cash flows consist of an initial investment of $5,000 and a cash inflow the following year of $7,500. Geneva estimates that its risk-adjusted cost of capital is 15\%. Currently. 1 U.S. dollar will buy 1.5078 Swiss francs. In addition, one-year risk-free securities in the United States are ylelding 5.50%, while similar securities in Switzerland are yielding 3.25%. What is the expected forward exchange rate one year from now? [Hint Remember that the "home" country is Switzerland.] 1.555S SF per U.S.\$ 1.4756 SF porU.S.\$ 1.3333 SF per U.S.\$\$ 1.2500 SF per U.S.\$ 0.9787 SF per US. 5

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