Introduction to Finance

a. 
Determine the nation’s gross private domestic investment.
b. 
If imports exceed exports by $25 million, how would your an-
swer to (a) change?
8. 
A nation’s gross domestic product is stated in U.S. dollars at 
$40 million. The dollar value of one unit of the nation’s currency 
(FC) is $0.25.
a. 
Determine the value of GDP in FCs.
b. 
How would your answer change if the dollar value of one FC 
increases to $0.30?
9. 
A country in Southeast Asia states its gross domestic product in 
terms of yen. Assume that last year its GDP was 50 billion yen when 
one U.S. dollar could be exchanged for 120 yen.

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Problems
189
a. 
Determine the country’s GDP in terms of U.S. dollars for last year.
b. 
Assume the GDP increases to 55 billion yen for this year, while 
the dollar value of one yen is now $0.01. Determine the country’s 
GDP in terms of U.S. dollars for this year.
c. 
Show how your answer in (b) would change if one U.S. dollar 
could be exchanged for 110 yen.
10. 
Challenge Problem
(
Note: 
This exercise requires knowledge of 
probabilities and expected values.) Following are data relating to a 
nation’s operations last year.
Capital consumption allowances 
$150 million
Undistributed corporate profi ts 
40 million
Personal consumption expenditures 
450 million
Personal savings 
50 million
Corporate inventory valuation adjustment 
–5 million
Federal government defi cit 
–30 million
Government expenditures
10 million
State and local governments surplus 
1 million
Net exports of goods and services 
–2 million
Gross private domestic investment 
200 million