Question

You are a U.S. investor who invested $440,000 in India five years ago. Assume that your investment gained 8 percent per year. If the exchange rate moved from 70.5 rupees per dollar to 72.8 rupees per dollar over the five-year period, what was your total return on this investment? (Use Excel or BAII+ to answer this question. Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places.)

Answer 1

Using excel to calculate

US investment	Rate	Number of Years	Exchange rate 5 years ago	Amount of Indian Rupees Invested	Amount of Indian Rupees after 5 years	Conversion of Rupees to Dollars at new echange Rate
$   440,000.00	8%	5	70.5	$      31,020,000.00	45578556.94	$             626,079.08
			Excel Formula	(=440000*70.5)	(=3102000*(1+8%)^5	(=45578556.94)

Total Return of This investment using calculator or Excel =(626079.08-440000)/440000 =42.29%