Calculate the effective financing rate for a u.s. company

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1. The annual interest rate on the Canadian dollar is 9%. The forecast of the Canadian dollar's value for the next year is shown below. Calculate the effective financing rate for a U.S. company. Show how you derive the answer.

Percentage Change Probability
    -1.0%                  15%
    -1.5%                  30%
    -2.0%                  55%

2.The annual interest rate on the Swiss franc is 4%. It is expected to appreciate 3% over the next year. Calculate the effective financing rate for a U.S. company. Show how you derive the answer.

Reference no: EM13910088

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