For context, "In July 1984, the British Government decided to privatize Jaguar plc. Jaguar sold over 50 % of its cars in the United States, but its production was confined to Britain, so it was subject to considerable exchange rate exposure. Your task is to take into account the exposure in pricing the shares of Jaguar and value how much the firm is worth under several exchange rate scenarios. Below is a list of questions you must address in your case analysis."
Consider the exposure (delta) of Jaguar to the $/ rate for a U.S. investor rather than a U.K. investor. Is the exposure to the dollar-based owners the same as that of the poundbased investors above? Why or why not?
Projected 1984 1985 1986 1.350 1.324 1.298 Dol 1987 1.272 1988 1.2471.223 1983 1989 1 Dollar/sterling United States 12.0% 13.5% 15.0% 2 3 Growth, units (%) Volume, units 16.5% 18.0% 18.0% 15260 17091 19399 22308 25989.16 30667 36187 4 5 Inflation(%) USS price/unit 3.0% 3.0% 3.0% 25631 26400 27192 60660 3.0% 28008 28848 29713 107524 6 sales, dollars 438065 512119 5 727896 884685 38693 46749 sales, sterling 324492 1572185 709342 879377 Rest of the world Growth, units (%) Volume, 12.0% 13.0% 14.0% 8 9 15.0% 16.0% 16.0% 13207 14792 16715 19055 21913.08 25419 29486 units 10 Inflation(%) 11 price/unit, sterling 5.0% 5.0% 5.0% 17284 18148 19056 30334 36310 5.0% 20008 21009 22059 12 sales, sterling 255662 3 2 438445 534026 650444 13 14 15 var. cost of sales/unit NWC discount rate 13521 1419714907 30000 35695 42950 18.0% 18.0% 18.0% 15652 16435 17257 52260 64295 79108 18.0% 18.0% 18.0% Oth Total sales, units 31883 36113 41363 69027 83059 47902 56086 65674 124336 152982 16 Total revenues 580154 8 2 1010630 8 51270 61659 6 17 Var. cost sales 431091 749778921772 1133302 18 Depreciation 19 R&D 20 Distribution 21 Administration 10000 14470 16545 18000 21417 25770 13300 13965 14663 15396 22000 23100 24255 25468 18896 21594 24689 31356 38577 47465 16166 16975 17823 26741 28078 29482 58750 69977 102699 125276 22 Total Costs 496156 7 6 842937 10277 13081 23 EBIT 83999 29400 35970 45786 5459966801 85031 109000 140642 180089 10000 14470 16545 64599 81271 10157 127896 162236 204778 7 167693 216373 277060 58693 75730 96971 ax 25 EBIAT 26 Depreciation 27 Operating cash flow 18896 21594 24689 Projected 1984 1985 1986 1.350 1.324 1.298 Dol 1987 1.272 1988 1.2471.223 1983 1989 1 Dollar/sterling United States 12.0% 13.5% 15.0% 2 3 Growth, units (%) Volume, units 16.5% 18.0% 18.0% 15260 17091 19399 22308 25989.16 30667 36187 4 5 Inflation(%) USS price/unit 3.0% 3.0% 3.0% 25631 26400 27192 60660 3.0% 28008 28848 29713 107524 6 sales, dollars 438065 512119 5 727896 884685 38693 46749 sales, sterling 324492 1572185 709342 879377 Rest of the world Growth, units (%) Volume, 12.0% 13.0% 14.0% 8 9 15.0% 16.0% 16.0% 13207 14792 16715 19055 21913.08 25419 29486 units 10 Inflation(%) 11 price/unit, sterling 5.0% 5.0% 5.0% 17284 18148 19056 30334 36310 5.0% 20008 21009 22059 12 sales, sterling 255662 3 2 438445 534026 650444 13 14 15 var. cost of sales/unit NWC discount rate 13521 1419714907 30000 35695 42950 18.0% 18.0% 18.0% 15652 16435 17257 52260 64295 79108 18.0% 18.0% 18.0% Oth Total sales, units 31883 36113 41363 69027 83059 47902 56086 65674 124336 152982 16 Total revenues 580154 8 2 1010630 8 51270 61659 6 17 Var. cost sales 431091 749778921772 1133302 18 Depreciation 19 R&D 20 Distribution 21 Administration 10000 14470 16545 18000 21417 25770 13300 13965 14663 15396 22000 23100 24255 25468 18896 21594 24689 31356 38577 47465 16166 16975 17823 26741 28078 29482 58750 69977 102699 125276 22 Total Costs 496156 7 6 842937 10277 13081 23 EBIT 83999 29400 35970 45786 5459966801 85031 109000 140642 180089 10000 14470 16545 64599 81271 10157 127896 162236 204778 7 167693 216373 277060 58693 75730 96971 ax 25 EBIAT 26 Depreciation 27 Operating cash flow 18896 21594 24689
