CHAPTER 12 Ganado Germany is now competing in a number of international (export markets, growth markets, in which most of its competitions are sueign. Now how would you expect Ganado Germany's operating expersare to respond to the depreciation of the curo? Ganade Germany would most likely try to profit from its now weak currency home country (Germany), and would try and increase sales volumes dramatically in a growth market by keeping the price in cures the same. The result is something like case 2 in the chapter discussion, where volume could jump dramatically (thinking positive Assumptions 2014 2015 2016 20171 2018 Sales volume (unit) 1.100.000 14 Sales price per il E 10.00 10.00 10.00 10.00 Direct cost permit E 10.00 10.00 E 10.00 10.00 10.00 German corporate tax rate 29.99 29 59 299 29.5% Exchange rate (56) 1.000 0.0000 0.0000 14 DODO 0.0000 CHAPTER 8 Ganado Corporation entered into a three-year cross-currency interest rate swap to receive U.S. dollars and pay Swiss francs. Ganado, however, decided to unwind the swap after one year - thereby having two years left on the settlement costs of unwinding the swap after one year. Repeat the calculations for unwinding, but assume that the following rates now apply: Swap Rates Original: US dollar Original: Swiss franc 3- year bid 5.56% 1.93% 3-year ask 5.59% 2.01% Assumptions Notional principal Original spot exchange rate, SFr./S New (1-year later) spot exchange rate, SFr./S New fixed US dollar interest New fixed Swiss franc interest Values 10,000,000 1.5 1.556 5.20% 2.20% CHAPTER 12 Ganado Germany is now competing in a number of international (export markets, growth markets, in which most of its competitions are sueign. Now how would you expect Ganado Germany's operating expersare to respond to the depreciation of the curo? Ganade Germany would most likely try to profit from its now weak currency home country (Germany), and would try and increase sales volumes dramatically in a growth market by keeping the price in cures the same. The result is something like case 2 in the chapter discussion, where volume could jump dramatically (thinking positive Assumptions 2014 2015 2016 20171 2018 Sales volume (unit) 1.100.000 14 Sales price per il E 10.00 10.00 10.00 10.00 Direct cost permit E 10.00 10.00 E 10.00 10.00 10.00 German corporate tax rate 29.99 29 59 299 29.5% Exchange rate (56) 1.000 0.0000 0.0000 14 DODO 0.0000 CHAPTER 8 Ganado Corporation entered into a three-year cross-currency interest rate swap to receive U.S. dollars and pay Swiss francs. Ganado, however, decided to unwind the swap after one year - thereby having two years left on the settlement costs of unwinding the swap after one year. Repeat the calculations for unwinding, but assume that the following rates now apply: Swap Rates Original: US dollar Original: Swiss franc 3- year bid 5.56% 1.93% 3-year ask 5.59% 2.01% Assumptions Notional principal Original spot exchange rate, SFr./S New (1-year later) spot exchange rate, SFr./S New fixed US dollar interest New fixed Swiss franc interest Values 10,000,000 1.5 1.556 5.20% 2.20%
