Which it can invest for up to three years

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Berkshire Hathaway, whose global sales are generally dollar denominated, finds it has excess cash of $65,000,000,000, which it can invest for up to three years. It has determined that its best options are either a three-year Euro-dollar ($) deposit paying 1.85% or a three-year Euro denominated deposit paying 1.35% since it expects the Euro to appreciate .50% per annum against the dollar over the next three years. Using cash flow analysis determine the best currency option in which BH should invest. Be sure to show your complete calculations of the annual return on each investment possibility 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 BH revised its outlook for Euro to appreciate only .49% per year? Show all calculations!!!

Reference no: EM132417248

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