1. One year ago the spot rate of U.S. dollars for Canadian dollars was $1.2/C$1. Since that time the interest rate in the U.S. has been 4% greater than that in Canada. What is the current spot exchange rate of U.S. dollars for Canadian dollars?
2. If the covered interest parity holds, the spot rate of U.S. dollars for Canadian dollars was $1.05/C$1. Since that time the interest rate in the U.S. has been 6% greater than that in Canada. then what is the forward exchange rate?
3. Company estimates that its beta is 2.25. The capital structure is 75% debt and 25% equity. Before tax cost of debt is 10 % and tax rate is 20%. Risk free rate is rRF = 6% and market risk premium (rm - rRF ) = 8%: What is the WACC of the company?