Assume that Interest Rate Parity holds. The spot rate for the Euro is $1.20 and the one year forward rate is $1.23. The annual rate of interest in Germany on annual deposits is 2.439%. What is the annual rate of interest on deposits in the United States?© BrainMass Inc. brainmass.com October 25, 2018, 8:40 am ad1c9bdddf
Spot Rate of Euro=$1.20
Forward Rate of Euro=$1.23
Interest Rate in Foreign country=2.439%
Interest Rate in Home ...
Solution depicts the steps to calculate the interest rate by using concept of "Interest Rate Parity".
Direct Foreign Investment Decision Proposal
Direct Foreign Investment Decision Proposal and Presentation
Prepare a 2000-word proposal in which you select the optimal financing and investment strategy for your scenario. Include a PowerPoint file summarizing your proposal with at least 5 slides.
Include the following information in your proposal:
o Identify which country you chose and why. Use India and Brazil
o Identify foreign exchange rate data.
o Use foreign exchange and cost of capital data to determine appropriate capital sources.
o Conduct a sensitivity analysis, based on the following questions:
What if funds are blocked? How does this affect the parent organization?
What if the subsidiary provided funds?
How does the source of capital affect the subsidiary and parent organization?
What sources of capital would minimize the cost of capital to the subsidiary?
What happens if the country you chose provides incentives to invest? Now that your organization is profitable, the country is taking incentives back. How do you determine the residual value at the end of the project life?
How is the value of an organization determined from the following perspectives?
o Expiration of project life
o Friendly or unfriendly buyout
o Economic decision to change locations
o Nationalization or confiscation of organization
Format your paper according to APA standards.View Full Posting Details