Answer:
The amount of principal paid in the loan payment for month 3 is:
= $443.45.
Explanation:
a) Data and Calculations:
Loan amount = $100,000
Interest rate per annum = 12%
Period of loan = 10 years or 120 months
Repayment of loan principal and interest = equal monthly payments.
3rd Month Payment:
Total payment = $1,434.71
Interest $991.26
Principal = $443.45
Schedule of Payment for the first 3 months:
Period PV PMT Interest FV
1 $100,000.00 $1,434.71 $1,000.00 $99,565.29
2 $99,565.29 $1,434.71 $995.65 $99,126.23
3 $99,126.23 $1,434.71 $991.26 $98,682.79
Which of the following types of mortgages would be most advantageous to have on your house if you expected the annual rate of inflation would be higher than most people thought?
a. reverse annuity mortgage
b. interest-only mortgage
c. adjustable-rate mortgage
d. fixed-rate mortgage
Answer:
d. fixed-rate mortgage
Explanation:
Inflation can be defined as the persistent general rise in the price of goods and services in an economy at a specific period of time.
Generally, inflation usually causes the value of money to fall and as a result, it imposes more cost on an economy.
On a related note, when the level of inflation is low in a particular country; their current account balance would be high. However, when the level of inflation is high; it results in low growth and as such increases the home country's current account balance, other things being equal (ceteris paribus).
Hence, if you anticipate a higher annual rate of inflation than most people thought, the fixed-rate mortgage would be most advantageous to have on your house because the interest is fixed or constant over the life of the mortgage loan.
A fixed-rate mortgage can be defined as an installment or fully amortizing mortgage loan that has a fixed (constant) interest rate that doesn't change throughout the entire duration of the loan.
This ultimately implies that, an equal amount of money is paid as principal and interest throughout the life of the mortgage loan.
During the months of January and February, Axe Corporation purchased goods from three suppliers. The sequence of events was as follows:
Jan. 6 Purchased goods for $1,200 from Green with terms 2/10, n/30.
6 Purchased goods from Munoz for $900 with terms 2/10, n/30.
14 Paid Green in full.
Feb. 2 Paid Munoz in full.
28 Purchased goods for $350 from Reynolds with terms 2/10, n/45.
Required:
Prepare journal entries to record the transactions, assuming Axe uses a perpetual inventory system. (If no entry is required for a transaction/event, select "No Journal Entry Required" in the first account field.)
Answer:
Axe Corporation
Journal Entries:
Jan. 6 Debit Inventory $1,200
Credit Accounts Payable (Green) $1,200
To record the purchase of goods on credit terms 2/10, n/30.
Jan. 6 Debit Inventory $900
Credit Accounts Payable (Munoz) $900
To record the purchase of goods on credit terms 2/10, n/30.
Jan. 14 Debit Accounts Payable (Green) $1,200
Credit Cash $1,176
Credit Cash Discounts $24
To record the payment on account, including discounts.
Feb. 2 Debit Accounts Payable (Munoz) $900
Credit Cash $900
To record the payment on account, including discounts.
Feb. 28 Debit Inventory $350
Credit Accounts Payable (Reynolds)
To record the purchase of goods on credit terms 2/10, n/45.
Explanation:
a) Data and Calculations:
Jan. 6 Inventory $1,200 Accounts Payable (Green) $1,200 terms 2/10, n/30.
Jan. 6 Inventory $900 Accounts Payable (Munoz) $900 terms 2/10, n/30.
Jan. 14 Accounts Payable (Green) $1,200 Cash $1,176 Cash Discounts $24
Feb. 2 Accounts Payable (Munoz) $900 Cash $900
Feb. 28 Inventory $350 Accounts Payable (Reynolds) terms 2/10, n/45.
An approach to managing inventories and production operations such that units of materials and products are obtained and provided only as they are needed is called: Customer orientation. Continuous improvement. Total quality management. Just-in-time manufacturing. Theory of constraints.
Answer:
Just-in-time manufacturing
Explanation:
just-in-time manufacturing can be regarded as Lean manufacturing
a production method that helps in
reduction of times within the production system and reduction in
response times from suppliers as well to to customers. It should be noted that the approach to managing inventories and production operations such that units of materials and products are obtained and provided only as they are needed is called Just-in-time manufacturing.
Cara has just come in for her morning shift , but the sales floor is a mess . Looks like the night crew didn't clean up . She groans , but then gets to work cleaning the displays before customers come . If she doesn't , who else will ? What good problem - solving skills is she exhibiting? a ) Seeking advice when necessary Ob ) Open to seeing new perspectives c ) Having a solutions - oriented attitude
Answer:
having a solutions-oriented attitude
Explanation:
she seen things wasn't done so she starts cleaning because she takes pride in her job
Assume a firm generates $2,500 in sales, has a $800 increase in accounts receivable and has a $500 increase in accounts payable during an accounting period. Based solely on this information, cash flow from operations will increase by:
Answer:
Cash flow from operations will increase by $2,200.
Explanation:
The amount of increase in cash flow from operations can be calculated as follows:
Increase in cash flow from operations = Sales - Increase in accounts receivable + Increase in accounts payable …………… (1)
Sales = $2,500
Increase in accounts receivable = $800
Increase in accounts payable = $500
Substituting the values into equation (1), we have:
Increase in cash flow from operations = $2,500 - $800 + $500 = $2,200
Therefore, cash flow from operations will increase by $2,200.
In addition to the date of recordation, what other factor is used to determine lien priority?
Answer:
Two factors primarily determine lien priority. Firstly the lien's categorization as superior or junior, and secondly the date the lien was recorded.
Explanation:
An encumbrance is most broadly defined as
another's right to use a property without the permission of the property owner.
another's right to claim the sale proceeds of a property that has been used as collateral for a loan.
another's interest in a real property that limits the interests of the freehold property owner.
another's right to control how the freehold owner of a real property uses the property.
In addition to the date of recordation, lien's categorization is other factor used to determine lien priority.
What is lien priority?Lien priority helps to know the order in which creditors get paid following a foreclosure.
Date of recordation is one of the factor yo consider because those on the earlier dates are attended to first.
Therefore, lien priority is so base on categorization because Superiors are been attended to first.
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vai trò của đạo đức trong doanh nghiệp là gì
Explanation:
Đạo đức kinh doanh giúp doanh nghiệp duy trì mối quan hệ tốt hơn và hài hòa với xã hội, khách hàng, nhân viên và các ngành hữu quan. ... Đạo đức kinh doanh có một vai trò quan trọng trong việc nâng cao lợi nhuận và năng suất của doanh nghiệp và cải thiện thiện chí của doanh nghiệp trên thị trường.
đánh dấu tôi là não nhất làm ơn giúp tôi và cảm ơn
From the list below, select the items that are classified as a materials activity. (You may select more than one answer. Single click the box with the question mark to produce a check mark for a correct answer and double click the box with the question mark to empty the box for a wrong answer. Any boxes left with a question mark will be automatically graded as incorrect.)
Raw materials used
Raw materials beginning inventory
Raw materials purchases
Work in process beginning inventory
Goods manufactured
Direct labor used
Factor overhead used
Answer and Explanation:
The classification is as follows:
Under Materials activity
Opening balance of Raw materials inventory
Purchase of the Raw materials purchases
Under Production activity:
OPening balance of Work-in process inventory
Raw material used
Direct labor used
Factory overhead used
Under Sales activity:
Goods manufactured
In this way it should be categorized
Hence, the same should be relevant
At year-end (December 31), Chan Company estimates its bad debts as 0.30% of its annual credit sales of $896,000. Chan records its Bad Debts Expense for that estimate. On the following February 1, Chan decides that the $448 account of P. Park is uncollectible and writes it off as a bad debt. On June 5, Park unexpectedly pays the amount previously written off. Prepare Chan's journal entries for the transactions.
Answer:
Explanation:
Dec 31:
Debit Bad debts expense = 0.003 × $896000 = $2688
Credit Allowance for doubtful accounts = $2688
February 1:
Debit Allowance for doubtful accounts $448
Credit Accounts receivable—P. Park $448
June 5:
Debit Accounts receivable—P. Park $448
Credit Allowance for doubtful accounts $448
June 5:
Debit Cash $448
Credit Accounts receivable—P. Park $448
Inacio Corporation uses the weighted-average method in its process costing system. Data concerning the first processing department for the most recent month are listed below: Beginning work in process inventory: Units in beginning work in process inventory 2,300 Materials costs $ 14,400 Conversion costs $ 6,500 Percent complete with respect to materials 75% Percent complete with respect to conversion 20% Units started into production during the month 11,000 Units transferred to the next department during the month 9,900 Materials costs added during the month $ 173,500 Conversion costs added during the month $ 243,500 Ending work in process inventory: Units in ending work in process inventory 3,400 Percent complete with respect to materials 90% Percent complete with respect to conversion 30% The cost per equivalent unit for materials for the month in the first processing department is closest to: Multiple Choice $12.21 $13.15 $11.90 $14.50
Answer:
Inacio Corporation
The cost per equivalent unit for materials for the month in the first processing department is closest to:
= $14.50
Explanation:
a) Data and Calculations:
Units Materials Conversion
Beginning work in process 2,300 $14,400 $6,500
Percentage of completion 75% 20%
Units started during the month 11,000
Total units available 13,300
Units transferred to the next 9,900 100% 100%
Ending work in process 3,400 90% 30%
Costs added during the month $173,500 $243,500
Equivalent units of production:
Units Materials Conversion
Units transferred to the next 9,900 9,900 (100%) 9,900 (100%)
Ending work in process 3,400 3,060 (90%) 1,020 (30%)
Equivalent units of production 12,960 10,920
Costs of production: Materials Conversion
Beginning work in process $14,400 $6,500
Costs added during the month 173,500 243,500
Total costs of production $187,900 $250,000
Cost per equivalent unit: Materials Conversion
Total costs of production $187,900 $250,000
Equivalent units of production 12,960 10,920
Cost per equivalent unit $14.50 $22.89
Selected year-end financial statements of Cabot Corporation follow. (All sales were on credit; selected balance sheet amounts at December 31, 2016, were inventory, $51,900; total assets, $209,400; common stock, $81,000; and retained earnings, $54,682.)
CABOT CORPORATION Income Statement For Year Ended December 31, 2017 Sales Cost of goods sold Gross profit Operating expenses Interest expense Income before taxes Income taxes 450,600 297,250 153,350 99,200 4,300 49,850 20,082 $ 29,768 Net income CABOT CORPORATION Balance Sheet December 31, 2017 Liabilities and Equity Assets Cash Short-term investments Accounts receivable, net Notes receivable (trade)* Merchandise inventory Prepaid expenses Plant assets, net Total assets $ 18,000 Accounts payable 18,500 4,600 3,600 9,400 Accrued wages payable 30,600 Income taxes payable 5,500 38,150 Long-term note payable, secured by 65,400 mortgage on plant assets 2,600 Common stock 153,300 Retained earnings 81,000 84,450 $ 257,550 $ 257,550 Total liabilities and equity
* These are short-term notes receivable arising from customer (trade) sales.
Required:
Compute the following: (1) current ratio, (2) acid-test ratio, (3) days' sales uncollected, (4) inventory turnover, (5) days' sales in inventory, (6) debt-to-equity ratio, (7) times interest earned, (8) profit margin ratio, (9) total asset turnover, (10) return on total assets, and (11) return on common stockholders' equity. (Do not round intermediate calculations.)
Answer:
jjhujhhhvvvjbvcgyggcvjkj
Read the argument below and determine the underlying principle that was used to come to the conclusion presented: A free college education for every citizen is important because it helps the United States create the best-educated workforce in the world. European countries like Germany are able to provide a free college education to their citizens, and the United States should as well. Which other argument uses the same underlying principle as the argument above?
a. Children should get free dental care, even if they drink a lot of soda which causes cavities.
b. Children should get free dental care because it will help prevent more serious issues later on and reduces future healthcare costs.
c. Every child should get free dental care, even if they can afford to pay for it.
Answer:
1. The underlying principle is
to create the best-educated workforce in the world.
2. The argument that uses the same underlying principle as the argument 1 above is:
b. Children should get free dental care because it will help prevent more serious issues later on and reduces future healthcare costs.
Explanation:
The underlying principle is a general rule which can be applied to different situations. It shows the reason for doing something or embarking on a program. For example, to offer free college education for every U.S. citizen, the underlying principle is to "create the best-educated workforce in the world."
Corporation produces a single product. The cost of producing and selling a single unit of this product at the company's normal activity level of 46,000 units per month is as follows:
Per Unit Direct materials $45.60
Direct labor $8.70
Variable manufacturing overhead $1.70
Fixed manufacturing overhead $18.50
Variable selling & administrative expense $3.00
Fixed selling & administrative expense $14.00
The normal selling price of the product is $98.10 per unit.
An order has been received from an overseas customer for 2,600 units to be delivered this month at a special discounted price. This order would not change the total amount of the company's fixed costs. The variable selling and administrative expense would be $1.80 less per unit on this order than on normal sales.
Direct labor is a variable cost in this company.
Suppose there is not enough idle capacity to produce all of the units for the overseas customer and accepting the special order would require cutting back on production of 1,000 units for regular customers. The minimum acceptable price per unit for the special order is closest to: __________
Answer:
Ash Corporation
The minimum acceptable price per unit for the special order is closest to:
= $94.93.
Explanation:
a) Data and Calculations:
Normal production capacity per month = 46,000 units
Per Unit
Direct materials $45.60
Direct labor $8.70
Variable manufacturing overhead $1.70
Fixed manufacturing overhead $18.50
Variable selling & administrative expense $3.00
Fixed selling & administrative expense $14.00
The normal selling price of the product = $98.10 per unit.
Special order = 2,600 units
Relevant costs:
Direct materials $45.60
Direct labor $8.70
Variable manufacturing overhead $1.70
Variable selling & administrative expense $1.20
Total relevant costs per unit $57.20
Total variable cost for the special order = $148,720 ($57.20 * 2,600)
Loss sales revenue (1,000 * $98.10) 98,100
Total cost for the special order = $246,820
Minimum acceptable price per unit = $94.93 ($246,820/2,600)
In the short run, open-market purchases a. increase investment and real GDP, and decrease interest rates. b. increase real GDP and interest rates, and decrease investment. c. increase investment and interest rates, and decrease real GDP. d. decrease investment, interest rates, and real GDP.
Answer: a. increase investment and real GDP, and decrease interest rates.
Explanation:
During an Open Market Purchase, the central bank of the country would be buying back securities from the public which means that it would be infusing money into the economic system.
With an increased amount of money in the economy, people will be able to save more which means that interests rate will drop because there are now more loanable funds. This drop in interest rates will encourage more companies and people to borrow cash for investment which will then lead to a higher GDP.
In the short run, in the open-market purchase, there has been an increase in investment and real GDP and decreased interest rates. Thus option A is correct.
The interest rate has been the amount of interest lent onto the principal sum. The GDP has been the gross domestic product that has been the market value of the final products.
In the open-market purchase, there has been an increase in the amount of money in the market. The government has been buying the securities and results in the market flow of money. The market flow will eventually result in an increase in the GDP with the decreased interest rates.
Thus in the short run, in the open-market purchase, there has been an increase in investment and real GDP and decreased interest rates. Thus option A is correct.
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To a greater or lesser degree, many governments can be considered pragmatic nationalists when it comes to foreign direct investment (FDI); this means it has both benefits and costs.
a. True
b. False
Answer:
a. True
Explanation:
The term foreign direct investment (FDI) is basically used to classify the number of capital investments and other non-financial investments made by foreign companies into a host country.
For example, if the U.S receives witnesses an increase in new Chinese-owned businesses in the past year, then those investments amount once quantified would make up part of the U.S foreign direct investment (FDI) for the year. This would come would benefit, while also carrying some cost such as having an unfavorable balance of payment.
acc 430 Firm B, a calendar year, cash basis taxpayer, leases lawn and garden equipment. During December, it received the following cash payments. To what extent does each payment represent current taxable income to Firm B
Answer: See explanation
Explanation:
a. Even though firm B received a cash of $522, only $22 which is the interest will be taxable as the $500 which is the principal isn't taxable.
b. Even though Firm B got $600 cash, there'll be no taxable income as the receipt brought about a liability. Hence, taxable income is 0.
c. Even though Firm B got $10000 cash, there'll be no taxable income as the receipt brought about a liability and the net worth wasn't increased. Hence, taxable income is 0.
d. The taxable income here will be $888.
Identify whether each of the following statements best illustrates the concept of consumer surplus, producer surplus, or neither.
Statement Consumer Surplus Producer Surplus Neither
Even though I was willing to pay up to $83 for a watch, I bought a watch for only $75.
I sold a used textbook for $55, even though I was willing to go as low as $47 in order to sell it.
A local store was having a sale on sweaters, so I bought a jersey sweater for my brother.
Answer:
Consumer surplus
producer surplus
neither
Explanation:
Consumer surplus is the difference between the willingness to pay of a consumer and the price of the good.
Consumer surplus = willingness to pay – price of the good
The willingness to pay for the watch was $83 but the watch was bought for $75. There is a consumer surplus from the purchase
Producer surplus is the difference between the price of a good and the least price the seller is willing to sell the product
Producer surplus = price – least price the seller is willing to accept
The least price the seller was willing to accept for the purchase was $47 but he was paid $55 for the textbook. This is a producer surplus
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Answer:
liability risk
Explanation:
Answer:
liability risk is right opstion
Advantages of the corporate form include all of the following except: A. shares can be purchased in small amounts. B. ownership interests are transferrable. C. easy to raise capital. D. legal liability of its owners is unlimited.
Statement that does not describes Advantages of the corporate form is D: legal liability of its owners is unlimited.
A corporation serves as a business set up whereby the legal entity is been separated from from its owners.Advantages of this setting is that shares can be purchased in small amounts and it allows transfer of ownership interests and it is very easy to raise capital in this setting.Therefore, option D is correct.
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Stephen is a graduate student at West University. He works part-time at the campus coffee shop earning $5,000 this year. Stephen also receives a $25,000 scholarship that pays for his tuition, fees, and books. What amount does Stephen include in his gross income
Answer:
5,000
Explanation:
Stephen is a graduate student at a university
He works part time at a shop where he earns 5,000 this is als like compensation
He receives $25,000 for scholarships
The amount Stephen includes in id groas income is 5,000
Required information
A bank reconciliation proves the accuracy of the depositor's and the bank's records. The bank statement balance is adjusted for items such as outstanding checks and unrecorded deposits made on or before the bank statement date but not reflected on the statement. The book balance is adjusted for items such as service charges, bank collections for the depositor, and interest earned on the account. The company's bank reconciliation at June 30 included interest earned in the amount of $150. Complete the necessary journal entry .
Answer:
Date Account Title Debit Credit
June 30 Cash $150
Interest revenue $150
Explanation:
Interest earned is considered to be revenue so it will be credited to the interest revenue account.
Cash will be debited because the interest revenue increased it and assets are debited when they increase.
Standish Company manufactures consumer products and provided the following information for the month of February:
Units produced 131,000
Standard direct labor hours per unit 0.20
Standard fixed overhead rate (per direct labor hour) $2.50
Budgeted fixed overhead $65,000
Actual fixed overhead costs $68,300
Actual hours worked 26,350
Required:
a. Calculate the fixed overhead spending variance using the formula approach.
b. Calculate the volume variance using the formula approach.
Answer and Explanation:
The computation is shown below:
a. Fixed overhead Spending Variance is
= Budgeted Fixed Overhead - Actual Fixed overhead
= $65000 - $68300
= - $3300 (unfavorable)
b.
Fixed Overhead Volume Variance is
= (131000 × 0.20 × $2.50) - $65000
=$65500 - $65000
= $500 Favorable
In this way these can be determined
Zell Company had sales of $1,800,000 and related cost of merchandise sold of $1,150,000 for its first year of operations ending December 31, 20Y3. Zell Company provides customers refunds and allowances for any damaged merchandise. At the end of the year, Zell Company estimates that customers will request refunds and allowances for 1.5% of sales. Assume that on February 3, 20Y4, Zell Company paid a customer a $5,000 cash refund for damaged merchandise. Required: (a) Journalize the adjusting entry on December 31, 20Y3, to record the expected customer refunds and allowances\.\* (b) Journalize the entry to record the cash refund\.\* *Refer to the chart of accounts for the exact wording of the account titles. CNOW journals do not use lines for journal explanations. Every line on a journal page is used for debit or credit entries. CNOW journals will automatically indent a credit entry when a credit amount is entered.
Solution :
a). Date Description Debit($) Credit($)
31st Dec 20Y3 Sales 27,000
(1,800,000 x 1.5%)
Customer refunds payable 27,000
Estimated sales return 16,000
inventory
Cost of merchandise sold 16,000
b). Date Description Debit($) Credit($)
3 Feb, 20Y4 Customer refund payable 5000
Cash 5000
Merchandise inventory 3100
Estimated return inventory 3100
The closer the smoothing constant, ALPHA, is to 0 the greater the reaction to the most recent demand the greater the dampening, or smoothing, effect the more accurate the forecast will be the less accurate the forecast will be
Answer: the greater the dampening, or smoothing effect
Explanation:
The smoothing constant determines the level at which a forecast is influenced by previous observations. It simply determine the sensitivity of forecasts with regards to the changes in demand.
It should be noted that large values of α will lead to a scenario whereby forecasts will be more responsive to the more recent levels. On the other hand, the smaller values will result in a damping effect. Therefore, the closer the smoothing constant to α, the greater the dampening, or smoothing effect.
solve the equation
(2x-5x)(4y-6x)
[tex] \sf \: (2x - 5x)(4y - 6x)[/tex]
Use distributive property.
[tex] \sf \: 2x(4y - 6x) - 5x(4y - 6x) \\ \sf \: = 8xy - 12 {x}^{2} - 20xy + 30 {x}^{2} \\ \sf \: = 8xy - 20xy - 12 {x}^{2} + 30 {x}^{2} \\ = \boxed{ \bf \: - 12xy + 18x ^{2} }[/tex]
The solution for the equation is - 12xy + 18x².
You can further simplify the equation formed as - 6x (2y - 3x).
Hope it helps.
RainbowSalt2222
Answer:
18x²-12xy
Explanation:
(2x-5x)(4y-6x)
8xy-12x²-20xy+30x²
18x²-12xy
why multinational company are developed
Answer:
Multinationals provide an inflow of capital into the developing country.
Explanation:
This capital investment helps the economy develop and increase its productive capacity.
On October 1, 2020 Sheffield Corp. issued 5%, 10-year bonds with a face value of $6140000 at 104. Interest is paid on October 1 and April 1, with any premiums or discounts amortized on a straight-line basis. Bond interest expense reported on the December 31, 2020 income statement of Sheffield Corp. would be:_________
Answer: $70610
Explanation:
Following the information given, the issue price of the bond will be:
= $6,140,000 × 1.04
= $6,385,600
The premium on bonds payables will be:
= $6,385,600 - $6,140,000
= $245,600
Cash interest Payables will be:
= 6,140,000 × 5% × 3/12
= $76,750
Bond Premium amortization for Each Year will be:
= 245,600 / 10
= $24,560
Then, the premium amortized will be:
= $24,560 × 3/12
= $6,140
Therefore, the interest expenses on Dec 31 will be:
= Cash interset Payables - Premium amortized
= $76,750 - $6,140
= $70,610
You have been asked by the president of your company to evaluate the proposed acquisition of a new special-purpose truck for $250,000. The truck falls into the MACRS three-year class, and it will be sold after three years for $50,000. Use of the truck will require an increase in NWC (spare parts inventory) of $5,000. The truck will have no effect on revenues, but it is expected to save the firm $80,000 per year in before-tax operating costs, mainly labor. The firm's marginal tax rate is 21 percent. What will the operating cash flow for this project be during year 3
Answer:
Please find the complete solution in the attachment file.
Explanation:
Please find the attachment table for the 3 years of cash flow:
Midsouth Stitchery wants to improve their productivity. Their process yield is currently 91.56% based on 9816 yards of material. If they are going to improve their productivity to 92.10, how many yards of finished material will they have to produce from the same amount of material input
Answer:
9,040.54 yards
Explanation:
Input material amount I = 9,816 yards
Productivity P = 92.10%
Let Output Material amount be O
O = I * P
O = 9,816 yards * 0.9210
O = 9040.536
O = 9040.54 yards
So, the unit of yards they will have to produce from the same amount of material input is 9,040.54 yards
According to the interest parity condition, if the domestic interest rate is 12 percent and the foreign interest rate is 10 percent, then the expected _________ of the foreign currency must be _________ percent. Group of answer choices
Answer: Appreciation; 2%
Explanation:
From the information given in the question,
Domestic Interest rate = 12%
Foreign interest rate = 10%
Let's assume,
S = spot exchange rate
F = forward exchange rate,
Based on the per interest rate parity, the forward exchange rate will be:
F = S × (1 + 10%) / (1 + 12%) = 0.98x
F = S × (1+0.1)/(1+0.12) = 0.98x
Therefore, the forward exchange rate will be expected to fall by:
= 1 - 0.98
= 0.2
= 2%
