What will happen if ibm revised its outlook for the yen

Assignment Help Econometrics
Reference no: EM13199681

IBM, whose global sales are generally dollar denominated, finds it has excess cash of $8,500,000,000, which it can invest for up to three years. It has determined that its best options are either a three-year Euro-dollar ($) deposit paying 2.75% or a three-year yen denominated deposit paying 1.75% since it expects the yen to appreciate 0.9% per annum against the dollar over the next three years. Using cash flow analysis determine the best currency option in which IBM should invest. Be sure to show your complete calculations of the annual return on each investment at the end of the three-year term. Assume that the annual interest amount is reinvested, i.e. compounds, at the same annual interest rate. Would your answer change if IBM revised its outlook for the yen to appreciate 1.2% per year?

Reference no: EM13199681

Questions Cloud

Explain the statement export its way out of trouble : An article in Business Week warned of the dangers of deflation as the collapse of numerous Asian economies was creating worries that Asia might try to “ export its way out of trouble”.
What would a export in adam smiths world : Country B has 35000 units of labor and takes 7 units of labor to produce one unit of manufactures and 5 units to produce one unit of food. What is the price of manufactures in terms of food at which A and B would respectively supply manufactures.
Weighted average cost of capital for ctrl : Calculate the weighted average cost of capital for CTRL using the market valuation approach.
State the two-sample test for equality of proportions : Find the test statistic and do the two-sample test for equality of proportions. Is the decision close?
What will happen if ibm revised its outlook for the yen : Using cash flow analysis determine the best currency option in which IBM should invest. Be sure to show your complete calculations of the annual return on each investment at the end of the three-year term.
The economy''s natural rate of unemployment : These schedules reflect the fact that, prior to the period we're examining, decisions makers entered into contracts and made choices anticipating that the price level would be P105.
State the blood alcohol concentration and r : the blood alcohol concentration and R, given as a percent, is the risk of having a car accident.
What is amcs ebit for 2011 : What is AMCs EBIT for 2011 and where would AMC's total marketing and general and administrative expenses be shown?
What is the 18-month forward rate for one pound in dollars : If the spot rate for British pounds is 0.57 pounds equals 1 US $, and the annual interest rate on fixed rate one-year deposits of pounds is 3.5% and for US$ is 2.5%, what is the ten-month forward rate for one dollar in terms of pounds.

Reviews

Write a Review

Econometrics Questions & Answers

  Calculating herfindahl index

Determine the Herfindahl index for an industry composed of three companies one with 70% of the market, and the other two with 20 and 10 percent of the market respectively one company with 50% share

  Compute the irr of each investment

a. Compute the IRR of each investment b. At MARR=15% determine the acceptability of each project c. If A and B are mutually exclusive projects, which project would you select based on the rate of return of incremental investment

  Calculate the value of the government budget surplus

Compare the equilibrium levels of consumption C, government spending G, and planned investment I in Parts g and h. Based on this comparison, why might some economists prefer expansionary fiscal policy while others prefer expansionary monetary poli..

  At what price-output combination is total profit maximized

PRESTO Products, Inc, manufactures small electrical appliances and has recently introduced an innovative new dessert maker for frozen yogurt and tofu that has the clear potential to offset the weak pricing and and sluggish volume growth experience..

  Write an equation for predicting sales based on assumptions

During the current year, sales total $2,000,000, income is $84,700 per capita, advertising is $500,000, and competitor advertising is $300,000. Previous period levels were $77,000 (income), $400,000 (advertising), and $400,000 (competitor advertis..

  Calculate tom''s opportunity cost of producing a ball

Tom can produce 40 balls per hour or 4 bats per hour. Tessa can produce 80 balls per hour or 4 bats per hour. a. calculate Tom's opportunity cost of producing a ball. b. calculate Tessa's opportunity cost of producing a ball.

  Estimate will farma reap 500000 dollar in additional revenue

Farma Inc. is working on the development of a new drug to combat Fingulesa. It has identified two strategies to pursue. Strategy one has a probability of success of 40% and strategy 2 has a probability of success of 60%.

  Determine worker productivity increase rate

Suppose worker productivity increased at the rate of 1.9% per year. If the labor force grew by 1.5% per year, what rate of increase in RGDP would be sustainable without increasing inflation pressures

  What do you make of the large negative intercept estimate

Does the small R-squared in part (i) imply that spending is correlated with other factors affecting math10? Explain. Would you expect the R-squared to be much higher if expenditures were randomly assigned to schools-that is, independent of other s..

  How much output is produced with that set of resources

data for a firm's output at various levels of employment (L) to calculate: a) its marginal physical product of labor (MPPL) schedule; (b) its (MPPL/MRCL) schedule, given a fixed wage (W = MRCL) of $25 per hour per worker. (c) Assuming that capital..

  What is the airlines profit maximizing fare

as the exclusive carrier on a local airline route, a regional airline must determine the number of flights it will provide and the fare it will charge. Taking into account operating and fuel costs, airport changes, and so on, the estimated cost pe..

  Compare this result with the mpn for an increase in labor

graph the relationship between output and labor, holding capital constant at its current value. Find the MPN for an increase of labor from 100 to 110. Compare this result with the MPN for an increase in labor from 110 to 120. Does the marginal pro..

Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd