1. What is financial breakeven EBIT level for a firm that has $100 million debt @ 8% and annual Pfd Dividends of $2.6 million. The firm faces a tax rate of 35%.
2. The current exchange rate is USD/JPY is 109.07. The 90 day US T-Bill rate is 0.83% and the 1 yr. Treasury note rate is 1.01%. The Japanese 90 day rate is 0.009% and the 1 yr. rate is 0.15%. Using the International Fisher Effect forecast the USD/JPY exchange rate:
a. 3 months from now
b. 1 year from now