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DanielleElmas [232]
3 years ago
13

YZ Corporation, located in the United States, has an account payable of 750-million yen payable in one year to a bank in Tokyo.

The current spot rate is yen 116 per $ and the one year forward rate is yen 109 per $. The annual interest rate is 3 percent in Japan and 6 percent in the United States (assume the same lending and borrowing rates). The future (in one year) dollar cost of meeting this obligation using the money market hedge is:
Business
1 answer:
EleoNora [17]3 years ago
8 0

Answer:

Dollar cost of the foreign payable = $  6,653,833.28  

Explanation:

The money market hedge would be set up as follows:

<em>Step 1: Deposit in Yen (Tokyo)</em>

Deposit an amount in Yen  equal to

Amount to be deposited= Payable/(1+deposit rate)

= 750,000,000/(1.03)

=  Yen 728,155,339.8

<em>Step 2 : Convert the sum</em>

Convert Yen 728,155,339.8 at the spot rate  of yen 116 per $

Dollar amount =  728,155,339.8   / 116

                         = $ 6,277,201.205

<em>Step 3: Borrow at home (US)</em>

Borrow $ 6,277,201.205  for one year at an interest rate of 6%

Amount due (inclusive of interest) = Amount borrowed × 1.06

                                                       =$ 6,277,201.205 × 1.06

                                                        = $  6,653,833.28  

Dollar cost of the foreign payable = $  6,653,833.28  

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Answer:

The answer is 2. Ten percent of the principal of the loan

Explanation:

By law, maximum commissions for first trust deed loans are at :

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Second trust deed loans, on the other hand, are stated at 5% for loans up to 2years, 10% for loans between 2-3 years and 15% for loans more than 3 years.

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Thomlin Company forecasts that total overhead for the current year will be $11,742,000 with 164,000 total machine hours. Year to
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Answer:

d.$72 per machine hour

Explanation:

Predetermined overhead rate = Budgeted Overheads ÷ Budgeted Activity

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The predetermined overhead rate based on machine hours is $72 per machine hour.

3 0
2 years ago
Which statement is true of entrepreneurs?
strojnjashka [21]

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3 0
3 years ago
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Irving spent the day shopping and made the following purchases: Item Cost ($) Novel 8.75 Shirt 21.66 Lunch 9.13 Potted plant 16.
yan [13]

Answer:

The answer is: $151.49

Explanation:

To determine how much money did Irvine have at the beginning of the day we just add all his expenses to his account balance at the end of the day:

= $95.06 + $8.75 (novel) + $21.66 (shirt) + $9.13 (lunch) + $16.89 (potted plant)

= $151.49 was the amount of money Irvine had at the beginning of the day.

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3 years ago
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New attempt is in progress. Some of the new entries may impact the last attempt grading.Your answer is incorrect. Maloney's, Inc
VLD [36.1K]

Answer:

The WACC is 11.64%

Explanation:

The weighted average cost of capital or WACC is the cost to firm of raising its total capital based on its capital structure. The capital structure of the firm can contain debt, preferred stock and common stock. The WACC take the weight of each component as a proportion of total value of assets and multiply it by the rate of return or cost of each component.

WACC = wD * rD * (1-tax rate)  +  wE *rE

Where,

  • wD and wE represent the weights of debt and equity as a proportion of total assets
  • rD and rE are the cost of debt and cost of equity
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Weight of debt = 2000000 / (2000000 + 3000000)  =  2/5 or 0.4

Weight of equity is = 1 - 0.4 = 0.6

WACC = 0.4 * 0.06 * (1-0.4)  +  0.6 * 0.17

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