Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Please help _______________ A multinational company from Singapore wants to acquire a company in Indonesia for IDR 4 billion which still has IDR 1.2 billion

Please help

_______________

A multinational company from Singapore wants to acquire a company in Indonesia for IDR 4 billion which still has IDR 1.2 billion in debt. The company in Indonesia has a machine that is estimated to be able to generate cash flow of IDR 700 million per year for 6 years. The value of other assets that can be sold is IDR 550 million. The current rate is SGD1=IDR10,000. In the next 1 month, the Singapore exchange rate is estimated to strengthen by SGD1 = IDR10,500. Interest rate prevailing in Indonesia: 10%. Based on analyst calculations, political risk is estimated at 1%. Question: 1. What is the estimated acquisition value of the Indonesian company in terms of the best SGD currency?

2. Through the calculation of NPV based on cash flow in SGD, determine the investment decisions taken by the company in Singapore by making the exchange rate scenario that occurs at the end: a. First year: SGD1 = IDR12,000 b. Second year: SGD1 = IDR11,750 c. Third year: SGD1 = IDR11,500 d. Fourth year: SGD1 = IDR11,250 e. Fifth to sixth year: SGD1 =IDR11,000

3. How is the correlation between the prediction of the rupiah exchange rate against the SGD which tends to strengthen against this NPV calculation.

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image_2

Step: 3

blur-text-image_3

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

The New International Financial System Analyzing The Cumulative Impact Of Regulatory Reform

Authors: Douglas Evanoff , Douglas D Evanoff , Andrew G Haldane , George G Kaufman

1st Edition

9814678325,9814678341

More Books

Students also viewed these Finance questions