3 Construct a spreadsheet that compares the cash flows resulting from the two plans. Under the first plan, net baht-denominated cash flows (received today) will be invested in Thailand at 15% for a one-year period, after which the baht will be converted to pounds. Under the second plan, net baht-denominated cash flows are converted to pounds immediately and 60% of the funds will be used to support UK operations, while 40% are invested in the United Kingdom for one year at 8%. Which plan is superior given the expectation of the baht’s value in one year?

Recall from Chapter 18 that the new Thailand subsidiary of Blades plc received a one-time order from a customer for 120 000 pairs of ‘Speedos’, Blades’ primary product. There is a six-month lag between the time when Blades needs funds to purchase material for the production of the Speedos and the time when it will be paid by the customer. Ben Holt, Blades’ chief financial officer (CFO), has decided to finance the cost by borrowing Thai baht at an interest rate of 6% over a six-month period. Since the average cost per pair of Speedos is approximately 3500 baht, Blades will borrow 420 million baht. The payment for the order will be used to repay the loan’s principal and interest.