3 Construct a spreadsheet to compare the cash flows resulting from 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. The expected spot rate for the baht in one year is about £0.0147 (Ben Holt’s plan). Under the second plan, net baht-denominated cash flows are converted to pounds immediately and invested in the United Kingdom for one year at 8%. For this question, assume that all baht-denominated cash flows are due today.

Does Holt’s plan seem superior in terms of pound cash flows available after one year? Compare the choice of investing the funds versus using the funds to provide needed financing to the firm.

As a financial analyst for Blades plc you are reasonably satisfied with Blades’ current setup of exporting ‘Speedos’ (roller blades) to Thailand. Due to the unique arrangement with Blades’ primary customer in Thailand, forecasting the revenue to be generated there is a relatively easy task. Specifically, your customer has agreed to purchase 180 000 pairs of Speedos annually, for a period of three years, at a price of THB4594 (THB ¼ Thai baht) per pair. The current direct quotation of the pound–baht exchange rate is £0.016.