Say That the Current Direct Exchange Rate Is $1

question 8

Multiple Choice

Say that the current direct exchange rate is $1.5537/£.The cash inflow in pounds is £70,000 in two years and the discount rate is 7%.During this time,the anticipated annual inflation rate is 3% per year in the United States and 5% per year in the United Kingdom.What is the present value (in U.S.dollars) of the £100,000 after conversion from pounds to dollars if you are using current and forward exchange rates?

• A)$70,000
• B)$104,655.26
• C)$91,409.96
• D)$88,307.62

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Definitions:

Part-Time

A type of employment status where the worker is employed for fewer hours per week than a full-time employee, often offering flexible schedules.

Temporary Basis

A condition or situation that is not permanent and is expected to change or end after a certain period.

Regular Workforce

Describes the employees who work under standard employment contracts with predictable hours and benefits, as opposed to temporary or freelance workers.

Compressed Workweek

An employment schedule that allows a full week's work to be completed in fewer days than the traditional five-day workweek.