Use the following information for the next 2 questions. CanCo Ltd. is considering a 2 year project in France. The Cash flows will be 150,000 annually for the 2 years. The current spot rate is: 1 CA$ = .66667 The 1 year Can T-bond rate is 7% while the same security is 5% in France while the 2 year Can T-bond rate is 7.3%, while the same security is 5.4% in France.

FIND

a. What is the direct spot rate? $

B.Using the Interest Rate Parity relationship, what is the 2-year expected forward rate?

C. What is the converted Year 2 cash flow in Canadian dollars?