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I am a bit confused with the attached. Could really use some help. Thanks INTERNATIONAL FINANCIAL MANAGEMENT (FINA410-1405) Group Project The firm manufactures a global
I am a bit confused with the attached. Could really use some help. Thanks
INTERNATIONAL FINANCIAL MANAGEMENT (FINA410-1405) Group Project The firm manufactures a global positioning system (GPS) that sells for $2,000, with cost of goods sold (hardware 30% and software 70%) of 55% of sales. Compared to the United States, China offers a 7% cost reduction in electronics manufacturing hardware and a 45% reduction in software programming. India offers a 32% reduction in software programming costs. So far, you have been unable to determine whether India has the facilities to undertake the hardware manufacturing. The firm has to invest $300 million. As far as China is concerned, you can send hardware and software manufacturing to China or India. You have been asked to lead a team to study and create a report for the executive team on both countries as business opportunities. As a group, study both China and India to make your calculations and recommendations as follows. Group Deliverable (8-10 slides with in-depth presenter notes, excluding title and reference slides) Risk is a significant factor. Identify each of the risk factors for each country (political stability, exposures of transaction, interest rate, operating, and translation); currency exchange rates; currency controls; skilled labor; facilities; infrastructure; each country's track record in using foreign direct investment (FDI); and any history of political corruption and roadblocks to establishing a going concern business. Explore the expected GDP growth of each country and the forecast exchange rates to the U.S. dollar. Based on the forecast exchange rate with the U.S. dollar in 1 and 2 years, should the $300 million investments be paid for immediately, hedged, or paid 50% ($150 million) in 1 year and 50% in 2 years? What is the projected savings for the firm? What is the new cost of goods sold percent of sales for each of the countries? What are your recommendations on choice of country? How can your firm arrange the business to be most profitable? Assume the following: o Using the current spot rate for the yuan exchange rate, the 12 -month forward rate is showing a 1.5% weaker U.S. dollar, and the 24-month forward rate of exchange is showing a 2.4% weaker U.S. dollar. o Using the current spot rate for the rupee exchange rate, the 12 -month forward rate is showing a 1.0% weaker U.S. dollar and the 24-month forward rate of exchange is showing a 2.0% weaker U.S. dollar. Include in-text citations as well as a list of references using APA styleStep by Step Solution
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