1. You are considering a project that promises you cash flows of 575 USD each year for 8 years. Based on the riskiness of the project, you require a 10 percent return. What is the maximum you should be willing to pay?
2. The inflation rate in U.S. is 3%, and the inflation rate in Japan is 8.3%. The current exchange rate is 95 JPY/USD. If the purchasing power parity holds, what should be the new JPY/USD exchange rate at the end of the year?
Note that an indirect exchange rate is provided.