As the financial manager for a large multinational corporation (MNC), you have
been asked to assess the firms economic exposure. The two major currencies, other
than the U.S. dollar, that affect the company are the Mexican peso (MP) and the British
pound (). You have been given the projected future cash flows for next year:
Currency	Total inflow	Total outflow
British pounds	17,000,000	11,000,000
Mexican pesos	MP 100,000,000	MP 25,000,000
The current expected exchange rate in U.S. dollars with respect to the two currencies
is as follows:
Currency	Exchange rate
British pounds	$1.66 per pound
Mexican pesos	$0.10 per peso
To Do
Create a spreadsheet to do the following:
a. Determine the net cash flows for both the Mexican peso and the British pound.
b. Determine the net cash flow as measured in U.S. dollars. It will represent the
value of the economic exposure.
c. If the movements in Mexican Peso and the British Pound are highly correlated, how will this affect the companys degree of economic exposure?