The title says it all. Why did the Swiss National Bank end the curre.pdf

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The Titanic Shipbuilding Company has a noncancelable contract to build a small cargo vessel. Construction involves a cash outlay of $298,000 at the end of each of the next two years. At the end of the third year the company will receive payment of $640,000. The company can speed up construction by working an extra shift. In this case there will be a cash outlay of $630,000 at the end of the first year followed by a cash payment of $640,000 at the end of the second year. Use the IRR rule to calculate the (approximate) range of opportunity costs of capital at which the company should work the extra shift. (Round your answers to 2 decimal places.) The Titanic Shipbuilding Company has a noncancelable contract to build a small cargo vessel. Construction involves a cash outlay of $298,000 at the end of each of the next two years. At the end of the third year the company will receive payment of $640,000. The company can speed up construction by working an extra shift. In this case there will be a cash outlay of $630,000 at the end of the first year followed by a cash payment of $640,000 at the end of the second year. Use the IRR rule to calculate the (approximate) range of opportunity costs of capital at which the company should work the extra shift. (Round your answers to 2 decimal places.) Solution We have following cash flows: C1 C2 C3 Current arrangement (298,000) (298,000) 640,000 Extra shift (630,000) 640,000 - Incremental flows (332,000) 938,000 (640,000) Using the IRR, function we get IRR 1= 15.21% IRR2= 67.32% Therefore, capital cost would be in between 15.21% to 67.32%. C1 C2 C3 Current arrangement (298,000) (298,000) 640,000 Extra shift (630,000) 640,000 - Incremental flows (332,000) 938,000 (640,000).

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The title says it all. Why did the Swiss National Bank end the currency peg? The issue obviously
has many aspects, so I'm looking for a concise summary with references to explanations for
each of those crucial aspects.
Solution
The SNB suddenly dropped the cap last week for several reasons. First, many Swiss are angry
that the SNB has built up such large foreign-exchange reserves. Printing all those francs, they
say, will eventually lead to hyperinflation. Those fears are probably unfounded: Swiss inflation
is too low, not too high. But it is a hot political issue. In November there was a referendum
which, had it passed, would have made it difficult for the SNB to increase its reserves. Second,
the SNB risked irritating its critics even more, thanks to something that is happening this
Thursday: many expect the European Central Bank to introduce

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