The dollar interest rate is 6%,and the Swiss franc interest rate is 4%.If the required rate of return for a project in Switzerland is 15%,calculate the required rate of return in the U.S.for a similar project.

Question

Quizplus · Accepted Answer

The required rate of return in the U.S. can be calculated using the interest rate parity condition: (1 + required return in US) = (1 + required return in Switzerland) * (1 + US interest rate) / (1 + Swiss interest rate). Solving gives approximately 17.2%.

The Dollar Interest Rate Is 6%,and the Swiss Franc Interest