Problem 1.01 – Chantal DuBois
Multinational Business Finance
Eiteman, Stonehill, and Moffett
16th Edition
Determine the exchange rate in Brussels and the exchange rate in New York.
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Determine the exchange rate in Brussels and the exchange rate in New York.
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Determine the percentage change in the value of the peso and then comment on the peso’s fluctuations.
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How can Embraer manage its currency exposure given a contract to produce and deliver four aircraft to a U.S. airline for $ million, while also needing to pay foreign suppliers $ million for inputs one year from now?
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Najafi purchased a Korean firm and has Korean won due in six months. Determine the amount that Najafi would pay without a hedge, with a forward hedge, with a money market hedge, and finally, the amount Najafi will pay with an option hedge. Make a recommendation as to which hedge should be used if the Won is expected to be weaker and stronger relative to the dollar.
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How did Siam Cement’s aggressive growth strategy and the devaluation of the Thai baht lead to enormous losses during the Asian crisis in 1997?
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What are the costs and benefits of the forward hedge, money market hedge, and option hedge? What is the break-even reinvestment rate when looking at the forward vs the money market hedges?
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Calculate the gross profits for Manitowoc Crane if it maintains the same yuan price and volume, then recompute the gross profits assuming that there’s a drop in the unit volume due to a devaluation.
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Fill out very large grids for case 1 and case 2 and determine the present value of the firm’s gross margin and choose the better alternative.
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Determine the exchange rate between the dollar and the euro in Milan and in Chicago.
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Given the cost per ticket and two spot exchange rates between the euro and the dollar, determine the U.S. price of a seat for the match.
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