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Telstra, an Australian telecommunications company, is considering setting up a telecommunication station in the U.K. for three years. The station would cost GBP 40 million
Telstra, an Australian telecommunications company, is considering setting up a telecommunication station in the U.K. for three years. The station would cost GBP 40 million to build. Telstra expects to receive GBP 10 million, 30 million, and 20 million from year 1 to year 3, respectively. The discount rate is 5% p.a. in the U.K. and 4% p.a. in Australia. The current spot exchange rate is GBP0.50/A (1) Calculate the forward exchange rate from year 1 to year 3. (Please keep four decimal places. For example, please type in 9.3456 in the box if your answer is 9.3456 ) Year 1: Year 2: Year 3: (3 marks) (2) Calculate cash flow in million AUD from year 1 to year 3. (Please keep two decimal places. For example, please type in 9.35 in the box if your answer is 9.3456 ) Year 1: AUD million Year 2: AUD million Year 3: AUD million
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