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What organizations could Blades contact to obtain working capital financing 1. Assuming that Blades is unable to locate a Thai bank that is willing to issue an L/C on Blades behalf, can you think of a way Blades could utilize its bank in the U.S. to effectively obtain an L/C from a Thai bank? 2. What organizations could Blades contact to obtain working capital financing? If Blades is unable to obtain working capital financing from the ...

Other / Other 27 Apr 2016

What is the break-even salvage value of this project 1. Break-even Salvage Value. A project in Malaysia costs $4,000,000. Over the next three years, the project will generate total operating cash flows of $3,500,000, measured in today’s dollars using a required rate of return of 14 percent. What is the break-even salvage value of this project? 2. Capital Budgeting Analysis. Zistine Co. considers a one-year project in New Zealand s ...

Other / Other 27 Apr 2016

Compare the present value of the expected cash flows Capital Budgeting Analysis. Wolverine Corp. currently has no existing business in New Zealand but is considering establishing a subsidiary there. The following information has been gathered to assess this project: • The initial investment required is $50 million in New Zealand dollars (NZ$). Given the existing spot rate of $.50 per New Zealand dollar, the initial investment in ...

Other / Other 27 Apr 2016

Calculate the market value of long-term debt 1. Flagstaff Manufacturing’s (FM) only debt is represented by 800,000 bonds with a market price per bond of $1,050. It has 20 million shares of common stock outstanding with a market price of $50 per share, and no preferred stock. a. Calculate the market value of long-term debt and common equity, and the percentage of capital obtained from each source. b. The bonds have a coupon rate ...

Other / Other 27 Apr 2016

Why would an exporter provide financing for an importer 1. Banker’s Acceptances. a. Describe how foreign trade would be affected if banks did not provide trade-related services. b. How can a banker’s acceptance be beneficial to an exporter, an importer, and a bank? 2. Export Financing. a. Why would an exporter provide financing for an importer ? b. Is there much risk in this activity? Explain. Business Manageme ...

Other / Other 27 Apr 2016

In what ways is the estimated net present value 1. Uncertainty of Cash Flows. Using the capital budgeting framework discussed in this chapter, explain the sources of uncertainty surrounding a proposed project in Hungary by a U.S. firm. In what ways is the estimated net present value of this project more uncertain than that of a similar project in a more developed European country? 2. Accounting for Risk. Your employees have estimated the ...

Other / Other 27 Apr 2016

How would your answer change if the value of the cedi was expected to remain unchanged 1. Capital Budgeting Example. Brower, Inc. just constructed a manufacturing plant in Ghana. The construction cost 9 billion Ghanian cedi. Brower intends to leave the plant open for three years. During the three years of operation, cedi cash flows are expected to be 3 billion cedi, 3 billion cedi, and 2 billion cedi, respectively. Operating cash flows ...

Other / Other 27 Apr 2016

Impact of Reinvested Foreign Earnings on NPV 1. Capital Budgeting Logic. Lehigh Co. established a subsidiary in Switzerland that was performing below the cash flow projections developed before the subsidiary was established. Lehigh anticipated that future cash flows would also be lower than the original cash flow projections. Consequently, Lehigh decided to inform several potential acquiring firms of its plan to sell the subsidiary. L ...

Other / Other 27 Apr 2016

Describe the factors that PepsiCo likely considered 1. PepsiCo’s Project in Brazil. PepsiCo recently decided to invest more than $300 million for expansion in Brazil. Brazil offers considerable potential because it has 150 million people and their demand for soft drinks is increasing. However, the soft drink consumption is still only about one-fifth of the soft drink consumption in the U.S. PepsiCo’s initial outlay was us ...

Other / Other 27 Apr 2016

Explain how the Asian crisis would have affected the expected cash flows 1. Impact of Asian Crisis. Assume that Fordham Co. was evaluating a project in Thailand (to be financed with U.S. dollars). All cash flows generated from the project were to be reinvested in Thailand for several years. Explain how the Asian crisis would have affected the expected cash flows of this project and the required rate of return on this project. If the cas ...

Other / Other 27 Apr 2016