Alla Finance LLC is based in the US, with two subsidiaries, one located in the UK, and other in Norway. The US dollar has been depreciating against the Euro The British pound has been appreciating against the US dollar. The U.S. parent company oxports their main merchandise, luxury trams, in USD. The British subsidiary exports both in USD and in Euro. The Norwegian subsidiary exports predominantly in Euro. The parent company is now.contemplating the possibility to open another subsidiary in Canada Information about the British subsidiary operations are provided as follows: thritish Sublic infection Sales wome Sales price Direitosti Depreciation Selling and administration experie cwn And (2020) Crew Libis (2020) Langemans (2020) Working capital is expected to the same for the next year Tax 2546 5.000.000 14 65 0,000 1.300.000 1.200,000 NO,000 1.100.000 The foreign exchange rate changed from $1.3/ to $1.45/ in early 2020 and is expected to stay the same for the next few years, The weighted average cost of capital is 15%. You can assume the analysis is conducted over 3 years. Assume there is no change in working capital over the next 5 years.. (a) Why would Alfa Finance LLC consider opening a subsidiary overseas in Canada? Explain your answer with a brief example for each factor you find important. (2.5 marks] (b) Provide an analysis of the potential effect of the change in exchange rate for the U.S. parent company, for the Britishsidiary and for the Norwegian subsidiary. You can assume the above rates [3 marks) Alla Finance LLC is based in the US, with two subsidiaries, one located in the UK, and other in Norway. The US dollar has been depreciating against the Euro The British pound has been appreciating against the US dollar. The U.S. parent company oxports their main merchandise, luxury trams, in USD. The British subsidiary exports both in USD and in Euro. The Norwegian subsidiary exports predominantly in Euro. The parent company is now.contemplating the possibility to open another subsidiary in Canada Information about the British subsidiary operations are provided as follows: thritish Sublic infection Sales wome Sales price Direitosti Depreciation Selling and administration experie cwn And (2020) Crew Libis (2020) Langemans (2020) Working capital is expected to the same for the next year Tax 2546 5.000.000 14 65 0,000 1.300.000 1.200,000 NO,000 1.100.000 The foreign exchange rate changed from $1.3/ to $1.45/ in early 2020 and is expected to stay the same for the next few years, The weighted average cost of capital is 15%. You can assume the analysis is conducted over 3 years. Assume there is no change in working capital over the next 5 years.. (a) Why would Alfa Finance LLC consider opening a subsidiary overseas in Canada? Explain your answer with a brief example for each factor you find important. (2.5 marks] (b) Provide an analysis of the potential effect of the change in exchange rate for the U.S. parent company, for the Britishsidiary and for the Norwegian subsidiary. You can assume the above rates [3 marks)
