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question 6 and 7 please For the next three questions: A Canadian firm is considering P Great Britain. The subsidiary costs 16 million now to

question 6 and 7 please image text in transcribed
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For the next three questions: A Canadian firm is considering P Great Britain. The subsidiary costs 16 million now to establ inflows of 7.6 million per year at the end of each of the next valuation purpose, the company will be considered to rate is 0.83 British pounds per $1. The Canadian an 4% over this period. The current risk-free rates of intere and 8% in Great Britain. firm is considering purchasing a subsidiary in million now to establish and will generate cash 1 of each of the next three years. After that, for "pany will be considered to be worthless. The current exchange Perol. The Canadian annual inflation rate is expected to be risk-free rates of interest in Canada is 5% per annum 5. What is the cost of the project today in Canadian dollars? A. $13.28 million B. $14.63 million (C. $19.28 million D. $21.53 million E. $23.03 million 6. If uncovered interest parity holds, what is the expected spot rate two years from now? A. 0.830 B. 0.855 C. 0.863 V D 0.881 E. 0.907 7. What is the approximate rate of inflation in Great Britain? A. 2% B. 5% V (C.)7% D. 8% E. 10%

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