Question: please show work on how you get answer 3. Brower, Inc. just constructed a manufacturing plant in Ghana. The construction cost 9 billion Ghanian cedi.
3. Brower, Inc. just constructed a manufacturing plant in Ghana. The construction cost 9 billion Ghanian cedi. Brower intends to leave the plant open for three years. During the three years of operation, cedi cash flows are expected to be 3 billion cedi, 3 billion cedi, and 2 billion cedi, respectively. Operating cash flows will begin one year from today and are remitted back to the parent at the end of each year. At the end of the third year, Brower expects to sell the plant for 5 billion cedi. Brower has a required rate of return of 19 percent. It currently takes 8,700 cedi to buy one U.S. dollar, and the cedi is expected to depreciate by 6 percent per year. (Chapter 14) 4. A U.S. firm Biqing, Inc., expects to receive substantial payments in Indonesian rupiah and Thai baht in 1 month. Based on today's spot rates, the dollar value of the funds to be received is estimated at $700,000 for the rupiah and $300,000 for the baht. Thus Biqing is exposed to a currency portfolio weighted 70% in rupiah and 30 % in baht. Based on data for the last 20 months, it estimates the standard deviation of monthly % changes to be 10% for the rupiah and 8% for the baht, and a correlation coefficient of 0.6 between the rupiah and baht. What is the portfolio's standard deviation? (Chapter 10)
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