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in the CURRENCY SWAPS ( DEC 04 ADAPTED), part (b) (ii), in the worst case rates in the year 1 to 3, the figures are 0.27, 0.16 and 20.07.
how did they get this figure ? year 0 is 2000 divided by 85.40 but for worst case rates i was not able to get 0.27 in the year 1 by dividing 40 with 128.10.
should the year 1 for the worst case rates be 40 / 128.1 = 0.31 ???? not 0.27 ??
It is the PV that you should be dividing by 128.10 – not the cash flow.
(or if you prefer, divide 40 by 128.10, and then discount the answer – it gives the same result!)34.8/128.10 = 0.27
Sir,
How do we get 20.07 and 25.75 in b(iii)
I cant get it with 2658.32/288.23Sir can u please tell how do we get 20.07 and 25.75? I am trying all the ways 2658.32/288.23.. neither withh doing 2000/85.4 and 658.32/288 .. please dont get angry if i am being silly ?
For the best case scenario:
Of the total receipt of 4,040, we convert 2,000 at 85.40 (which gives 23.4192) and the other 2,040 at 129.88 (which gives 15.7068). So a total of 39.126.
This is the cash amount, so discounting it for 3 years at 15% gives 39.126 x 0.658 = 25.74.
(the tiny difference is rounding which is irrelevant).It is the same workings for the worst case scenario.
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