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FCF 9th edition Chapter 21

# FCF 9th edition Chapter 21 - Chapter 21 Problems 1-18 Input...

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Chapter 21 Problems 1-18 Input boxes in tan Output boxes in yellow Given data in blue Calculations in red Answers in green NOTE: Some functions used in these spreadsheets may require that the "Analysis ToolPak" or "Solver Add-in" be installed in Excel. To install these, click on "Tools|Add-Ins" and select "Analysis ToolPak" and "Solver Add-In."

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Chapter 21 Question 1 Input Area: a. Cash \$100 Euro value per \$ € 1.5363 b. \$ value per euro \$0.6509 c. Euro amount € 5,000,000 f. Pesos per \$ 10.3584 Output Area: a. Euros € 65.0915 b. One euro \$1.5363 c. Dollar value \$7,681,672 d. More worth New Zealand dollar e. More worth Mexican peso f. # of Pesos/Euro 15.9140 This is a cross rate. g. Most valuable = Kuwait Dinar = \$3.7595 Least valuable = Vietnam dong = \$0.00006020
Chapter 21 Question 2 Input Area: SF 100 £ £100 US dollars \$100 SF value per \$ 0.9531 \$ per £ \$1.9474 Output Area: £ 100, since \$194.740 £ 100, since (SF) 204.3227 Cross rate SF/£ 2.0432 Cross rate £/SF 0.4894

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Chapter 21 Question 3 Input Area: Spot ¥/\$ rate 108.2100 6 month ¥/\$ rate 106.9600 Spot \$/C\$ rate 1.0292 3 month \$/C\$ rate 1.0303 Output Area: The yen is selling at a premium because it is more expensive in the forward market than in the spot market \$0.0092413 versus \$0.0093493 The C\$ is selling at a discount because it is less expensive in the forward market than in the spot market \$0.9716284 versus \$0.9705911 The value of the dollar will fall relative to the yen. The value of the dollar will rise relative to the Canadian dollar.
Chapter 21 Question 4 Input Area: Spot exchange rate for C\$ \$1.06 6-month forward rate for C\$ \$1.11 Price of beer in Canada \$2.50 Output Area: a. The U.S. dollar, since C\$ = \$0.9434 b. Price of beer in U.S. \$2.3585 Among the reasons that absolute PPP doesn't hold are tariffs and other barriers to trade, transactions costs, taxes, and differential tastes.

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