Assignment:
In 10 years, Mid-Atlantic Corp. will be investing S200 000 either in Columbo or in Avalon. The exchange rate between the Columboan dollar and the Avalonian pound is fixed at S2 = £1. Dollars and pounds can be exchanged at no cost at any time.
If the S200 OOO is invested in Columbo, each dollar invested will return SO.30 per year for each of the following five years. If the S200 000 is converted to pounds and invested in Avalon, each pound invested will return £0.24 per year for the following seven years.
Columbo is subject to ongoing average inflation of 4%, while inflation in Avalon averages 2%. If the real ALARR for Alid-Atlantic is 10%, which investment is preferred? How much money should Alid-Atlantic set aside now (invested at the ALARR) to ensure that it has enough money to make the investment in 10 years?
Your answer must be, typed, double-spaced, Times New Roman font (size 12), one-inch margins on all sides, APA format and also include references.