If the purchasing power parity holds what should be the new


1. The future value of an annuity of $80 paid at the end of each 3 months for 3 years at an interest rate of 8% compounded quarterly is what amount?

2. The inflation rate in U.S. is 3.6%, and the inflation rate in Japan is 9.9%. The current exchange rate is 98 JPY/USD. If the purchasing power parity holds, what should be the new JPY/USD exchange rate at the end of the year?

Note that an indirect exchange rate is provided.

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Financial Management: If the purchasing power parity holds what should be the new
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