1. Suppose 1-year interest rate is 6% in Britian and 4% in the U.S in the 1 year forward market. 1 British pound equals $1.65 if interest rate parity holds, what is the current spot exchange rate?
2. Monika's Dinor is operating at 94 percent of its fixed asset capacity and has current sales of $611,000. How much can the firm grow before any new fixed assets are needed?
3. What is the value today of a 15-year annuity that pays $690 per year? The annuity’s first payment occurs six years from today. The annual interest rate is 12 percent for Years 1 through 5, and 14 percent thereafter.