Question Details

Forecasts indicate a relatively stable euro 


1. Comparing International Projects. Savannah, Inc., a manufacturer of clothing, wants to
increase its market share by acquiring a target producing a popular clothing line in Europe. This
clothing line is well established. Forecasts indicate a relatively stable euro over the life of the
project. Marquette, Inc., wants to increase its market share in the personal computer market by
acquiring a target in Thailand that currently produces radios and converting the operations to
produce PCs. Forecasts indicate a depreciation of the baht over the life of the project. Funds
resulting from both projects will be remitted to the respective U.S. parent on a regular basis.
Which target do you think will result in a higher net present value? Why?

2. Privatized Business Valuations. Why are valuations of privatized businesses previously owned
by the governments of developing countries more difficult than valuations of existing firms in
developed countries?




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