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1. Measuring Economie Exposure. Using the following cost and revenue information shown for DeKalb, Inc., determine how the total cash flow in USD would be

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1. Measuring Economie Exposure. Using the following cost and revenue information shown for DeKalb, Inc., determine how the total cash flow in USD would be affected by three possible exchange rate scenarios for the New Zealand dollar (NZ$): (1) NZS = $.50, (2) NZ$=$.55, and (3) NZS = $.60. (Assume U.S. sales will be unaffected by the exchange rate.) Assume that NZ$ earnings will be remitted to the U.S. parent at the end of the period. Ignore possible tax effects. Please also calculate the economic exposure of the firm. Forecasted Net Cash Flows: DeKalb Inc. (in millions of U.S. dollars and New Zealand dollars) New Zealand Business NZ$800 100 Sales Cost of Materials Operating Expenses Interest Expense Cash Flow U.S. Business $800 500 300 100 -$100 NZ$700

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