Intro Recall the "exchange rates" defined in our lecture: ($0$1)=0.92, ($0$2)=0.85 Part 1 Attempt 1/10 for 10 pts. What is the implied 'exchange rate' between time 1 and 2, ($1$2) ? (that's asking, how much is $1 in two years worth in one year) Part 2 Attempt 1/10 for 10 pts. What is the implied interest rate between time 1 and 2 ? Correct The "exchange rate" ($1$2)=0.920.85=0.9239, therefore 0.9239(1+r1,2)=1 Now there is a project with three certain cashflows: a current cash input of $10MM into the project, a cash of $5MM at t=1 and $7MM at t=2 generated from the project. Suppose a buyer wishes to purchase this project but pay for it one year from now. How much should you ask for? Intro Recall the "exchange rates" defined in our lecture: ($0$1)=0.92, ($0$2)=0.85 Part 1 Attempt 1/10 for 10 pts. What is the implied 'exchange rate' between time 1 and 2, ($1$2) ? (that's asking, how much is $1 in two years worth in one year) Part 2 Attempt 1/10 for 10 pts. What is the implied interest rate between time 1 and 2 ? Correct The "exchange rate" ($1$2)=0.920.85=0.9239, therefore 0.9239(1+r1,2)=1 Now there is a project with three certain cashflows: a current cash input of $10MM into the project, a cash of $5MM at t=1 and $7MM at t=2 generated from the project. Suppose a buyer wishes to purchase this project but pay for it one year from now. How much should you ask for