1. Assume you can exchange $1 for ¥119.39 or €.7989 in New York. In Tokyo, the exchange rate is ¥1 = €.0068. If you have $1,200, how much profit can you earn using triangle arbitrage?
2. A new bottling machine will cost $24,000 initially. The machine will produce after-tax cash flows of $4,000 in the first year and $9,000 each year thereafter for 4 years. Your company's cost of capital is 3%.
1. What is the payback period for this project?
2. What is the discounted payback period for this project?