You are expecting a payment of Can$138,000 two years from now.Assume the risk-free rate of return is 2.7 percent in Canada and 3.1 percent in the U.S.Also assume the current exchange rate is Can$1.2903 = $1.Approximately how much will the payment two years from now be worth in U.S.dollars?

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Quizplus · Accepted Answer

To find the present value of the Can$138,000 in U.S. dollars, first discount it using the Canadian risk-free rate: Can$138,000 / (1 + 0.027)^2 = Can$130,747. Then convert to U.S. dollars using the current exchange rate: Can$130,747 / 1.2903 = $107,813.

You Are Expecting a Payment of Can$138,000 Two Years from Now.Assume