Cemerlang Inc. is a conglomerate company which has four subsidiaries located in Brunei, Malaysia, United Kingdom, and Switzerland. The exchange rates available for the company are MYR2.9000/BND, GBP0.4000/BND and BND1.2500/CHF. The following is the intersubsidiary payments matrix for Cemerlang Inc in multiple currency.

a. Convert all the cash flows into Brunei Dollar (BND) and fill in the table cells below to show the intersubsidiary payments matrix for Cemerlang Group. If the transaction cost is 2%, how much the company need to pay (in BND) if they decided not to do any netting?

Transaction cost in BND with no netting.

b. Perform multilateral netting by filling up the table below. If the transaction cost is 2%, how much the company need to pay (in BND) if they decided to do multilateral netting?

Transaction cost in BND with multilateral netting.
 
 
 

RECEIVING PAYING SUBSIDIARY (in millions) SUBSIDIARY (in millions) Brunei Malaysia United Switzerland Kingdom Brunei MYR58 GBP10 CHF12.5 Malaysia BND10 GBP12 CHF16.25 United BND 20 MYR29 CHF 20 Kingdom Switzerland BND15 MYR43.5 GBP6