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Finance

1. Finance CRN 16663 Enrique Fourzan & 09/18/20 Homework: Chapter 5 Homework core: 0 of 1 pt 4 of 7 (3 complete HW Score: 50%, 5-13 (similar to) Question Hel (Related to Checkpoint 5.5) (Solving for n) How many years wil it take for $490 to grow to $1,060.54 it's invested at 8 percent compounded annually? The number of years it will take for S490 to grow to $1,060.54 at 8 percent compounded annually is 18 years. (Round to one decimal place.) 39 9 ay for many Enter your answer in the answer box and then click Check Answer 18010 5 if it's All parts showing Clear Check Answer Sear sally?

2.While you were visiting Munich, you purchased a Range Rover for €100,000, payable in six months. You have enough cash in US dollars at your bank in NY City, which pays 3% interest for six months, to pay for the car. Currently, the spot exchange rate is $1.35/€ and the six-month forward exchange rate is $1.30/€. In Munich, the money market interest rate is 4% for six months. There are two alternative ways of paying for your Range Rover.

a. Keep the funds at your bank in the US and buy €100,000 forward.

b. Buy a certain amount of € spot today and invest the amount in Germany for six months so that the maturity value becomes equal to €100,000. Evaluate each payment method in terms of $ cost. Which method would you prefer? Why?

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