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The spot exchange rate for the Thai bhat is 30.000 bhat to the dollar or .00333...

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Finance

The spot exchange rate for the Thai bhat is 30.000 bhat to thedollar or .00333 dollar to the bhat. For capital budgetingpurposes, Ramo Corp needs to estimate the exchange rate 5 yearsfrom now. The U.S. interest rate is 2%; the interest rate inThailand is 6%. Calculate The estimated 5 year forward rate betweenthe 2 currencies.

Please show all works and steps

Answer & Explanation Solved by verified expert
4.2 Ratings (823 Votes)
Solution As per the Interest rate Parity model Exchange rate differential Interest rate differential Forward Rate Spot Rate 1 Interest Rate in Home Currency 1    See Answer
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Transcribed Image Text

The spot exchange rate for the Thai bhat is 30.000 bhat to thedollar or .00333 dollar to the bhat. For capital budgetingpurposes, Ramo Corp needs to estimate the exchange rate 5 yearsfrom now. The U.S. interest rate is 2%; the interest rate inThailand is 6%. Calculate The estimated 5 year forward rate betweenthe 2 currencies.Please show all works and steps

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