Question
In: Finance
1 Suppose you are a U.S. investor who is planning to invest $125,000 in Japan. You...
1 Suppose you are a U.S. investor who is planning to invest $125,000 in Japan. You do so at a starting exchange rate of 84.28 ¥/$. Your Japanese investment gains 7 percent, and the ending exchange rate is 88.65 ¥/$. What is your total return on this investment?
Solutions
Expert Solution
Amount Equivalent to Japanese investment = Spot exchange rate* Investment in $
= 84.28 *125000
=Yen 10535000
Investment Value in Yen after investment gain = 10,535,000 (1+.07) = Yen 11,272,450
Value of Yen invesment in $ = Investment Value in Yen after investment gain/Ending exchange rate
= 11,272,450/88.65
= $ 127,156.80
Total return on investment in $ = 127156.80 - 125000= $ 2156.80
Total return in % = Total return in $ /Initia investment
=2156.80/125000
= .01725 or 1.725%
jeff jeffy answered 2 years agoRelated Solutions
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