Jack, a Manitoba resident, plans to sell a house in Phoenix, Arizona in one year for a price of 10 million USD. As Canadian resident, Jack wants to calculate the CAD present value of this future cash flow. The spot exchange rate is S = 1.25CAD/USD and the 1-year forward exchange rate is F1 = 1.24CAD/USD. CAD discount rate for this cash flow is 5% and USD discount rate is 5%. a. What is the present value of 10 million USD computed by first discounting the USD cash flow and then converting it into CAD? b. What is the present value of 10 million USD computed by first converting USD to CAD and then discounting? c. Based on your answers to (a) and (b), are USD and CAD markets internationally integrated? First answer the question then briefly explain