Suppose your colleague has approached you with an opportunity to lend $35,000 to her laundry business in Accra. The Do It Yourself Flaunderette business plans to offer home services to customers in the area. Funds would be used to lease a delivery vehicle, purchase supplies, and provide working capital. Terms of the proposal are that you would receive $6,000 at the end of each year in interest, with the full $35,000 to be repaid at the end of ten years.

a) Assuming a 10% required rate of return, calculate the present value of cash flows and the net present value of the proposed investment

b) Based on this same interest rate assumption, calculate the cumulative cash flow of the proposed investment for each period in both nominal and present-value terms

c) What is the major financial risk exposed to Investors and multinational businesses exporting or importing goods and services or making foreign investments throughout the global economy?

d) On a recent drive, you spotted your dream home, which is currently listed at $400,000. Unfortunately, you are not in a position to buy it right away and will have to wait at least another six years before you can afford it. If house values are appreciating at an annual rate of inflation of 4%, how much will a similar house cost after six years?