Question
1) Simplify the following set of intra company cash flows for this US Firm. Consider the following exchange rates. Spot exchange rates $0.50 per SFr
1) Simplify the following set of intra company cash flows for this US Firm. Consider the following exchange rates.
Spot exchange rates |
$0.50 per SFr |
$1.50 per Euro |
$2 per Pound |
Disbursement | ||||
Receipts | US firm | Swiss firm | Italian fries | British firm |
US firm | - | $80 | $225 | $160 |
Swiss firm | SFr 270 | - | SFr 240 | SFr 430 |
Italian fries | 115 | 75 | - | 170 |
British firm | 75 | 120 | 115 | - |
Do the multi-lateral netting. If foreign exchange transactions cost is 0.45 percent, what savings results from netting?
Disbursement | Total Receipts | Final netting | |||
Receipts | US firm | Swiss firm | Italian fries | ||
US firm | |||||
Swiss firm | |||||
Italian fries | |||||
British firm | |||||
Total Disbursements | |||||
Final netting |
US Firm | Swiss Firm | ||
Italian Firm | British Firm |
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Fundamentals of Financial Management
Authors: Eugene F. Brigham, Joel F. Houston
12th edition
978-0324597714, 324597711, 324597703, 978-8131518571, 8131518574, 978-0324597707
