[adikini]

hello,

just attempting the mock exams and these two questions are giving me problems.. please help:

QN 1: An investor plans to exchange $1000 into euros now, invest the resulting euros for 12 months, and then exchange the euros back into dollars at the end of the 12 month period.
The spot exchange rate is EUR 1.415 per $1 and the euro interest rate is 2% per year.
The dollar interest rate is 1.8% per year.

Compared to making a dollar investment for 12 months, at what 12- month forward exchange rate will the investor make neither a loss or gain?

[adikini]

hello,
please help with this question. thank you.

On a market value basis, ABC is financed 70%by equity and 30% by debt. The company has an after-tax cost of 6% and an equity beta of 1.2. The risk -free rate of return is 4% and the equity risk premium is 5%.

what is the after-tax WACC of ABC?

Thank you

[Author]

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