Question
In: Finance
Please show how answer is derived. Assume the information below to answer the following questions: (1)...
Please show how answer is derived. Assume the information below to answer the following questions:
| (1) If you use covered interest arbitrage for a 90-day investment, what will be the amount of US dollars you will have after 90 days? |
| (2) What is the percentage gain or loss on an annual basis? |
| Amount of investment | $5,000,000 |
| Current spot rate of pound | 1.28 |
| 90-day forward rate of pound | 1.25 |
| 3-month deposit rate in US | 2% |
| 3-month deposit rate in UK |
3% |
Solutions
Expert Solution
SEE THE IMAGE. ANY DOUBTS, FEEL FREE TO ASK. THUMBS UP PLEASE
jeff jeffy answered 1 year agoRelated Solutions
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Direct Labor (variable) 40,000
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Depreciation (fixed) 23,000
Other (fixed) 5,500
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$0.70
20%
$0.71
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Quantity
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Total Revenue
Total Cost
ATC
MR
MC
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0
17
0
0
1
16
16
4
2
15
14
6
3
14
12
8
4
13
10
10
5
12
8
12
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Original Life
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Remaining Life
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Use the following information to answer the questions below:
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2017
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$ 1,072,500
less Cost of Goods Sold:
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346,125
Gross Profit
650,000
726,375
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575,000
609,500
Earnings before Interest & Taxes
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31,000
earnings before Taxes
50,000
85,875
Taxes
20,000
34,350
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$
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Balance Sheet info:
12/31/2016
12/31/2017
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