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# Suppose one British pound can purchase 1.82 U.S. dollars today

### Resolved Question:

Suppose one British pound can purchase 1.82 U.S. dollars today in the foreign exchange market, and currency forecasters predict that the U.S. dollar will depreciate by 12.0% against the pound over the next 30 days. How many dollars will a pound buy in 30 days?

(a) 1.12
(b) 1.63
(c) 1.82
(d) 2.04
(e) 3.64
Submitted: 6 years ago.
Category: Homework
Expert:  Curtis K replied 6 years ago.

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Customer: replied 6 years ago.

What did I do wrong? I thought that I submitted five questions but how kind i received answer for only one? I re-submit all five again. Thanks

•(1) Dakota Trucking Company (DTC) is evaluating a potential lease for a truck with a 4-year life that costs \$40,000 and falls into the MACRS 3-year class. If the firm borrows and buys the truck, the loan rate would be 10%, and the loan would be amortized over the truck's 4-year life. The loan payments would be made at the end of each year. The truck will be used for 4 years, at the end of which time it will be sold at an estimated residual value of \$10,000. If DTC buys the truck, its after tax cash flows would be the following: (Year 1) - 6,339; (Year 2) -4,764; (Year 3)-9,943; (Year 4) -5,640; all occurring at the end of respective years. The lease terms, call for a \$10,000 lease payment (4 payments total) at the beginning of each year. DTC's tax rate is 40%. Should the firm lease or buy?

(c) \$945
(d) \$997
(e) \$1,047

•(2) Suppose hockey skates sell in Canada for 105 Canadian dollars, and 1 Canadian dollar equals 0.71 U.S. dollars. If purchasing power parity (PPP) holds, what is the price of hockey skates in the United States?

(a) \$14.79
(b) \$63.00
(c) \$74.55

•(3) Dentaltech Inc. projects the following data for the coming year. If the firm follows the residual dividend policy and also maintains its target capital structure, what will its payout ratio be?

EBIT \$2,000,000
Interest rate 10%
% Debt 40%
Debt outstanding \$5,000,000
% Equity 60%
Shares outstanding \$5,000,000
Tax rate 40%

(a) 37.2%
(b) 39.1%
(c) 41.2%
(d) 43.3%
(e) 45.5%

•(4) Curry Corporation is setting the terms on a new issue of bonds with warrants. The bonds will have a 30-year maturity and annual interest payments. Each bond will come with 20 warrants that give the holder the right to purchase one share of stock per warrant. The investment bankers estimate that each warrant will have a value of \$10.00. A similar straight-debt issue would require a 10% coupon. What coupon rate should be set on the bonds-with-warrants so that the package would sell for \$1,000?

(a) 6.75%
(b) 7.11%