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MBA,MCS,M.phil
Devry University
Jan-2008 - Jan-2011
MBA,MCS,M.Phil
Devry University
Feb-2000 - Jan-2004
Regional Manager
Abercrombie & Fitch.
Mar-2005 - Nov-2010
Regional Manager
Abercrombie & Fitch.
Jan-2005 - Jan-2008
Mia Caruso Enterprises, a U.S. manufacturer of children’s toys, has made a sale in Cyprus and is expecting a C£ 4 million cash inflow in one year. The current spot rate is S = $1.80/C£ and the one-year forward rate is F 1 = $1.8857/C£.
What is the present value of Mia Caruso’s C£4 million inflow computed by first discounting
the cash flow at the appropriate Cypriot pound discount rate of 5%, and then converting the result into dollars?
What is the present value of Mia Caruso’s C£4 million inflow computed by first converting the
cash flow into dollars, and then discounting at the appropriate dollar discount rate of 10%?
What can you conclude about whether these markets are internationally integrated, based on your answers to parts a and b?
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