Question
BP? (UK) and Rosneft? (Russia) had severed a? long-term joint venture in? 2013, with Rosneft buying BP out with ?$55 billion in cash and a?
BP? (UK) and Rosneft? (Russia) had severed a? long-term joint venture in? 2013, with Rosneft buying BP out with ?$55 billion in cash and a? 20% interest? (equity interest) in Rosneft itself. Rosneft financed a large part of the buyout by borrowing heavily. The following? year, in July? 2014, BP received a dividend on its ownership interest in Rosneft of RUB25 billion. But? Rosneft's performance had been? declining, as was the Russian ruble. The winter of? 2014-2015 in Europe was a relatively mild? one, and? Europe's purchases of? Rosneft's natural gas had fallen as had the price of natural gas.? Rosneft's total sales were? down, and the ruble had clearly fallen dramatically. And to add debt to? injury, Rosneft was due to make a payment of USD19.6 billion in 2015 on its debt from the BP buyout. a. Assuming a spot rate of RUB 34.77 equals USD 1.00 in July? 2014, how much was the dividend paid to BP in U.S.? dollars? b. If Rosneft were to pay the same dividend to BP in July? 2015, and the spot rate at that time was RUB 75.04 equals USD 1.00?, what would BP receive in U.S.? dollars? c. If the combination of Western sanctions against Russia and lower global oil prices truly sent the Russian economy into? recession, and the spot rate was RUB 75.04 equals USD 1.00 in July? 2015, what might? BP's dividend be in July? 2015?
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