Question
Hi there, could you explain to me where I have gone wrong in the following questions? The questions are in italics and my workings/answers are
Hi there, could you explain to me where I have gone wrong in the following questions?
The questions are in italics and my workings/answers are in normal texts, while the correct text is in bold.
Thank you and much appreciated.
Q1 The multinational company Ozi Ltd. anticipates 45 million Australian dollars (A$) incomes from the local business next year. It forecasts next year 83 million Japanese yen (YEN), 60 million Indian rupee (INR) and 39 million Malaysian ringgit (MYR) earnings of its subsidiaries in Japan, Indian and Malaysia, respectively. The subsidiaries remit 63 per cent of their proceeds to the Australian parent. Calculate the total A$ cash flow if Ozi expects the next year value of YEN, INR and MYR are A$0.0257, A$0.0515and A$0.4569, respectively. (enter the whole number with no sign or symbol)
Local Biz: A$45 million
Foreign Subsidiaries:
-1 YEN = A$0.0257
o83 mil YEN = 0.0257 / 1 * 83 mil = A$2,133,100
-1 INR = A$0.0515
o60 mil INR = 0.0515 / 1 * 60 mil = A$3,150,000
-1 MYR = A$0.4569
o39 mil MYR = 0.4569 / 1 * 39 mil = A$17,819,100
63% * (A$2,133,100 + A$3,150,000 + A$17,819,100) = A$14,554,386
Total:
A$14,554,386 + A$45 mil = A$59,554,386
Correct answer: 59516586
Q2 The multinational company Ozi Ltd. anticipates 41 million Australian dollars (A$) incomes from the local business next year. It forecasts next year 87 million Japanese yen (YEN), 57 million Indian rupee (INR) and 38 million Malaysian ringgit (MYR) earnings of its subsidiaries in Japan, Indian and Malaysia, respectively.Due to foreign currency higher interest rate, its subsidiaries invest 56 per cent of their earnings in the country where they reside, and remaining incomes remit to the Australian parent.Calculate the total A$ cash flow if Ozi expects the next year value of YEN, INR and MYR are A$0.0250, A$0.0500and A$0.6242, respectively. (enter the whole number with no sign or symbol)
Local Biz: A$41 million
Foreign Subsidiaries:
-1 YEN = A$0.0250
o87 mil YEN = 0.0250 / 1 * 87 mil = A$2,175,000
-1 INR = A$0.0500
o57 mil INR = 0.0500 / 1 * 57 mil = A$2850,000
-1 MYR = A$0.6242
o38 mil MYR = 0.6242 / 1 * 38 mil = A$23,719,600
56% * (A$2,175,000 + A$2850,000 + A$23,719,600) = A$16,096,976
Total:
A$16,096,976 + A$41 mil = A$57,096,976
Correct answer: 53647624
Q3 The Perth International Co. anticipates 41 million Australian dollars (A$) earnings in Australia next year (i.e., year-one). It expects 54 million Hong Kong dollar (H$), 61 million Singapore dollar (S$) and 73 million New Zealand dollar (N$) incomes of its subsidiaries in Hong Kong, Singapore and New Zealand, respectively, in year-one. It also forecasts H$46 million, S$55 million and N$67 million proceeds of its subsidiaries after two years. The Perth International expects the current exchange rates A$0.2687/H$, A$0.8793/S$ and A$0.7145/N$ will be remaining the same in the next two years. If the subsidiaries remit their revenues to the Australian parent at the end of each year, estimate the value of Perth international based on its 6.71 per cent weighted average cost of capital or required rate of return.
Local Biz: A$41 million
Foreign Subsidiaries:
Exchange rates:
A$0.2687/H$A$0.8793/S$A$0.7145/N$
Year 1
HKD$54mil --> 54mil * 0.2867 = 14509800
SGD$61mil--> 61mil * 0.8793 = 53637300
NZD$71mil --> 71mil * 0.7145 = 50729500
Year 2
HKD$46mil --> 46mil * 0.2867 = 13188200
SGD$55mil --> 55mil * 0.8793 = 48361500
NZD$67mil --> 67mil * 0.7145 = 47871500
Total:
14509800 +53637300 + 50729500 + 13188200 + 48361500 + 47871500 = 228297800
41000000 + 228297800 = 269297800
Total A$ value = $269,297,800
6.71% weightage:
6.71 / 100 *269297800 = 1.807 x 10^7
Correct Answer: 246528332
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