An MNC’s cash flows and therefore its valuation can be affected by expected exchange rate movements (as explained in Chapter 1). Sanoma Co. is a U.S.-based MNC that wants to assess how its valuation is affected by expected exchange rate movements.

Given Sanoma’s business transactions and its expectations of exchange rates, fill out the table at the top of the shown below.

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EACH QUARTER DURING THE YEAR, SANOMA'S MAIN BUSINESS TRANS- ACTIONS WILL BE TO: a. Import materials from Canada CURRENCY USED IN TRANSACTION EXPECTED MOVE- MENT IN CUR- RENCY'S VALUE AGAINST THE U.S. DOLLAR DURING THIS YEAR HOW THE EXPECTED CURRENCY MOVEMENT WILL AFFECT SANOMA'S NET CASH FLOWS (AND THEREFORE VALUE) THIS YEAR Canadian dollar Depreciate b. Export products to Germany Euro Appreciate c. Receive remitted earnings Argentine peso Appreciate from its foreign subsidiary in Argentina d. Receive interest from its Australian dollar Depreciate Australian cash account e. Make loan payments on a loan provided by a Japanese bank Japanese yen Depreciate