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Please Help me on this finance question Pepa Company, the U.S.-based firm with Brazilian subsidiary, is engaged in production and sales of face masks for
Please Help me on this finance question
Pepa Company, the U.S.-based firm with Brazilian subsidiary, is engaged in production and sales of face masks for medical use. The financial controller of Pepa Company estimates future cash flow of the whole company in coming years: Year 2 Year 3 (In thousands) Year 1 Sales U.S. US$300 Brazil BRL1,000 Costs of Materials and Operating Expenses U.S. US$200 Brazil BRL200 US$350 BRL1,200 US$420 BRL1,250 US$280 BRL300 US$300 BRL1,500 US$0.24 US$0.26 US$0.28 Expected exchange rate of Brazilian real (BRL) at the end of each year (USD/BRL) (a) Calculate the value of the company (Ignoring tax effect) in term of U.S. dollars, assuming the required rate of return is 10% and all net cash flow from Brazil will be remitted to the U.S./settled at the end of every year. (8 marks)Step by Step Solution
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