Intro

Thornton Industries is a U.S. firms with operations in France. The company expects the following cash flows:

• U.S. sales of $150 million
• U.S. cost of goods sold of $60 million
• U.S. interest expenses of $12 million
• Selling, general and administrative expenses of $30 million
• French sales of 80 million
• French cost of goods sold of 11 million
• French interest expenses of $2 million

The company expects the euro exchange rate to be one of three possible values: $0.92 per euro, $1.02 per euro, or $1.12 per euro.

Part 1

What is the cash flow before taxes if the exchange rate turns out to be $0.92 per euro (in $ million)?

Part 2

What is the cash flow before taxes if the exchange rate turns out to be $1.02 per euro (in $ million)?

part 3

What is the cash flow before taxes if the exchange rate turns out to be $1.12 per euro (in $ million)?