Question: Using the assumptions in Tables 8.5 and 8.6, verify that equation (8.13) equals 6%. Table 8.5 Unhedged and hedged cash flows for a dollar-based firm

Using the assumptions in Tables 8.5 and 8.6, verify that equation (8.13) equals 6%.

Table 8.5

Unhedged and hedged cash flows for a dollar-based firm with euro-denominated debt. TABLE 8.5 Forward Exchange Rate 0.922 Unhedged Hedged Year Euro Cash Flow -3.5 -3.5 Dollar Cash Flow 1 -$3.226 -$3.304 0.944 -103.5 -$100.064 0.967

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