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Financing and Exchange Rate Risk The parent of Nester Co. (a U.S. firm) has no international business but plans to invest $20 million in a business in Switzerland. Because the operating costs of this business are very low, Nester Co. expects this business to generate large cash flows in Swiss francs that will be remitted to the parent each year. Nester will finance half of this project with debt. It has these choices for financing the project:
a. Which choice will result in the most exchange rate exposure?
b. Which choice will result in the least exchange rate exposure?
c. If the Swiss franc were expected to appreciate over time, which financing choice would result in the highest expected net present value?
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analyze the major effects that relative interest and inflation rates could have on a countrys currency. suggest the
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