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1. You believe that IRP presently exists. The nominal annual interest rate in Mexico is 20%. The nominal annual interest rate in the US is 2%. You expected that annual inflation will be about 8% in Mexico and 5% in the US. The spot rate of the Mexican peso is $.15 per Mexican peso. You will receive 1 million pesos on one year. Determine the amount of dollars that you will receive if you use a forward hedge.

a. $127,000 b. $150,000 c. $176,000 d. $123,529

2. Use Net Present Value and Break-Even Point and explain how these techniques may help the Starbucks achieve better financial performance.

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Financial Management, Finance

Category:- Financial Management
Reference No.:- M92766426

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