1answer.
Ask question
Login Signup
Ask question
All categories
  • English
  • Mathematics
  • Social Studies
  • Business
  • History
  • Health
  • Geography
  • Biology
  • Physics
  • Chemistry
  • Computers and Technology
  • Arts
  • World Languages
  • Spanish
  • French
  • German
  • Advanced Placement (AP)
  • SAT
  • Medicine
  • Law
  • Engineering
goldfiish [28.3K]
2 years ago
14

Currently, the spot exchange rate is $0.85/A$ and the one-year forward exchange rate is $0.81/A$. One-year interest is 3.5% in t

he United States and 4.2% in Australia. You may borrow up to $1,000,000 or A$1,176,471, which is equivalent to $1,000,000 at the current spot rate. How much can you realize certain profit in U.S. dollar terms? A) $48,025 B) $42,035 C) $50,625 D) $52,025 E) None of the above
Business
1 answer:
yarga [219]2 years ago
3 0

Answer:

B) $42,035

Explanation:

Calculation to determine How much can you realize certain profit in U.S. dollar terms

First step is to calculate the repayment liability after one year

Repayment liability = (A$1,176,471 × 1.042)

Repayment liability = A$1,225,882.78

Second step is to determine the investment yield

Investment yield = $1,000,000 ×(1+.035)

Investment yield = $1,000,000 × 1.035

Investment yield= $1,035,000

Third step is to convert the investment yield into A$ at the forward rate of the amount of $0.81

A $ to yield = $1,035,000 ÷ 0.81

A $ to yield= A$1,277,778.22

Now let determine How much can you realize certain profit in U.S. dollar terms

Arbitrage Profit=(A$1,277,778.22-$1,225,882.78)×0.81

Arbitrage Profit= A $51,895.44 × 0.81

Arbitrage Profit = $42,035

Therefore How much can you realize certain profit in U.S. dollar terms will be $42,035

You might be interested in
When purchasing a vehicle which of the following would initially offer the lowest monthly payment
choli [55]

Answer:

Balloon payment plan

Explanation:

4 0
2 years ago
Read 2 more answers
A manager who wants control over decisions and expects employees to obey is what type of manager
AfilCa [17]
The answer is b or a but I mean it both means the same thing, if this is on Plato it's a
3 0
3 years ago
Read 2 more answers
Which of the following assumptions would cause the constant growth stock valuation model to be invalid? The growth rate is zero.
Svetlanka [38]

Answer:

e. None of the above assumptions would invalidate the model

Explanation:

Incomplete question <em>"The constant growth model is given below: P0 = [D0(1 + g)]/[(rs - g)]"</em>

<em />

According to dividend discount model,  

P0 = D1/(R-G)

D1 - Dividend at t =1

R - Required rate

G - Growth rate

This would be invalid if R < G. In other words, Dividend growth model will be invalid in only one situation, that is, when growth rate is more than require return. In this situation growth model cannot be used.

8 0
2 years ago
A retail store credited the sales revenue account for the sales price and the amount of sales tax on sales. if the sales tax rat
alexira [117]
We have to calculate the amount of the sales taxes owed to a taxing agency.
The tax rate is 5% ( 0.05 ) and the balance in the sales revenue account amounted to $294,000.
$294,000 * 0.05 = $14,700
Answer:
Amount of the sales taxes is B ) $14,700.
8 0
3 years ago
Data related to the inventories of Alpine Ski Equipment and Supplies is presented below: Skis Boots Apparel Supplies Selling pri
natta225 [31]

Answer:

inventory value=$ 377,000.00  

Explanation:

In applying the rule of the lower cost of cost or net realizable value,we compare NRV(selling price minus cost to sell) with the replacement cost(current price), where the lower of the two is then compared against the original cost of the inventory item as done in the attached.

Value of inventory=$120,000+$126,000+$90,000+$41,000=$377,000.00  

 

Download xlsx
8 0
3 years ago
Other questions:
  • You think you did a good job of matching employees to the job to get a good fit, but you want to make sure. Considering costs an
    5·1 answer
  • A 13-year bond of a firm in severe financial distress has a coupon rate of 10% and sells for $930. The firm is currently renegot
    5·1 answer
  • Which of the following is NOT a proactive hiring procedure? a. ​conducting background investigations on prospective employees b.
    12·1 answer
  • On March 1, 2021, Stratford Lighting issued 10% bonds, dated March 1, with a face amount of $690,000. The bonds sold for $678,00
    10·1 answer
  • Last month, you lent a work colleague $5000 to cover some overdue bills. He agreed to pay you in 1 month with interest at 2% for
    6·1 answer
  • Suppose 60,000 pesos buys a basket of goods in Mexico. If, at the existing exchange rate, it costs less than 60,000 pesos to buy
    6·1 answer
  • After posting the entries to close all revenue and expense accounts, the Income Summary account of Cleaver Auto Services has a $
    9·1 answer
  • Poodle Corporation was organized on January 3, 2018. The firm was authorized to issue 98,000 shares of $5 par common stock. Duri
    13·1 answer
  • M Corp. has an employee benefit plan for compensated absences that gives each employee 15 paid vacation days. Vacation days can
    9·1 answer
  • Calculate the average stock in a department with annual sales of $1,840,000 and an annual stock turnover of 5.4.
    9·1 answer
Add answer
Login
Not registered? Fast signup
Signup
Login Signup
Ask question!