Critical Thinking: Study Problems
Complete the following Study Problems from your textbook. The numbers in parentheses refer to the chapter and the problem number, for example 3-5 refers to Chapter 3, problem 5. The Study problems are linked at the bottom of the page.
1: Relevant cash flows (11-1)
2: Calculating free cash flows (11-4)
3: New project analysis (11-9)
4: Comprehensive problem (11-15)
5: Real options and capital budgeting (11-17)
6: Risk-adjusted discount rates and risk classes (11-20)
7: What is meant by (a) exchange risk and (b) political risk? (16-6 RQ)
8: What risks are associated with direct foreign investment? How do these risks differ from those encountered in domestic investment? (16-8 RQ)
9: Spot exchange rates (16-2)
10: Spot exchange rates (16-7)
11: Interest rate parity (16-10)
12: Purchasing power parity (16-11)
You will likely use a spreadsheet for this assignment but you may choose to type up your answers in a Word document. In either case, be sure to show your work. Support your answers by showing the formulas you use and defining any variables in the formulas. Any essay responses should be supported with appropriate citations and references.
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