Answer:
Short the futures contract; Borrow at the risk-free rate; Long corn;
Explanation:
Spot rate = $3.20
Therefore implied future rate = spot x ert
Therefore implied future rate = 3.20 x e0.05 x 6/12
Therefore implied future rate = 3.20 x 1.025315
Therefore implied future rate = 3.281
Since implied future rate < future rate, we will short future contract and borrow and buy at spot
Therefore, 1st choice is correct
The correct answer is:
Creators
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The cost of each alternative is $25 million and $27.6 million.
<h3>Cost of each alternative</h3>
First alternative
Cost/Premium=$73 million-$48 million
Cost /premium=$25 million
Second alternative
Value to target to acquirer=$48 million+($3 million/.10)
Value of target to acquire=$78 million
Purchase price=.45($90 million+$78 million)
Purchase price=$75.6 million
Cost/premium=$75.6 million-$48 million
Cost/premium=$27.6 million
Therefore the cost of each alternative is $25 million and $27.6 million.
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Answer:
2.34 million
Explanation:
Vasudevan incorporation reported an operating income of $2.90 million
The depreciation is $1.20 million
The tax rate is 40%
= 40/100
= 0.4
The firm's expenditure on fixed assets and net operating working capital is $0.6 million
Therefore, the free cash flow can be calculated as follows
Free cash flow= operating profit-tax+depreciation-expenditure
= 2.90-(2.90×0.4)+1.20-0.6
= 2.90-1.16+1.20-0.6
= 2.34
Hence the free cash flow is 2.34 million