Question 25 Caterpillar currently exports 13,000 tractors to China at the yuan equivalent of USD 25,000 each. The current exchange rate is CNYB/USD but is forecasted to be CNY9/USD in the near future. The direct costs are 75% of the USD sales price. If Caterpillar uses 0% pass-through pricing strategy, what will be its before-tax profit when the yuan declines? USD 41,666,666 USD 38,194.444 USD 33,913,043 USD 61,875,000 USD 45,138,889 Question 26 4 points Save Answer Nintendo of Japan and Walmart of the United States have entered into a 5-year currency risk sharing agreement for Nintendo to accept U.S. dollar payments. If the spot rate on the day of invoicing is between JPY96/USD and JPY104/USD, Nintendo will invoice at the actual spot rate. Otherwise, Nintendo will invoice Walmart at the exchange rate where the two parties will share the yen fluctuation from the limits equally. If the spot rate on the invoicing date is ]pY95/USD, how much will Walmart pay on the invoice of JPY 100,000,000? USD 999,062.29 USD 1,075,268.82 USD 1,063,829.79 USD 1,047,120.42 USD 943,396.23 Question 27 Refer to the following table. A swap deal, that lowers the cost of each company by 75 basis points, is possible if MA Rex Technologies BBB 7% LIBOR +1 ON Interest Rate Swaps Xanadu Oil Corporation Credit Rating Fored rate cost of borrowing 54 Floating rate cost of borrowing LIBOR 0.5 Xanadu borrows at UBOR+0.5% and Rex borrows at the fixed rate of Rex borrows at the lived rate of and Xanadu borrows at the fixed rate of Xanadu borrows at SM fred Rex borrows at UBOR1M. Then they enter into a swap deal where Xanadu make payments at LIBOR and receives fixed rate payments at 5.25 Res borrows at LIBOR and Xanadu borrows at UBOR+0,5 Xanadu borrows at fred, Rex borrows at UIBOR:14. Then they enter into a swap deal where Xanadu receives payments at UBOR and makes fixed rate payments at 5.25% Question 25 Caterpillar currently exports 13,000 tractors to China at the yuan equivalent of USD 25,000 each. The current exchange rate is CNYB/USD but is forecasted to be CNY9/USD in the near future. The direct costs are 75% of the USD sales price. If Caterpillar uses 0% pass-through pricing strategy, what will be its before-tax profit when the yuan declines? USD 41,666,666 USD 38,194.444 USD 33,913,043 USD 61,875,000 USD 45,138,889 Question 26 4 points Save Answer Nintendo of Japan and Walmart of the United States have entered into a 5-year currency risk sharing agreement for Nintendo to accept U.S. dollar payments. If the spot rate on the day of invoicing is between JPY96/USD and JPY104/USD, Nintendo will invoice at the actual spot rate. Otherwise, Nintendo will invoice Walmart at the exchange rate where the two parties will share the yen fluctuation from the limits equally. If the spot rate on the invoicing date is ]pY95/USD, how much will Walmart pay on the invoice of JPY 100,000,000? USD 999,062.29 USD 1,075,268.82 USD 1,063,829.79 USD 1,047,120.42 USD 943,396.23 Question 27 Refer to the following table. A swap deal, that lowers the cost of each company by 75 basis points, is possible if MA Rex Technologies BBB 7% LIBOR +1 ON Interest Rate Swaps Xanadu Oil Corporation Credit Rating Fored rate cost of borrowing 54 Floating rate cost of borrowing LIBOR 0.5 Xanadu borrows at UBOR+0.5% and Rex borrows at the fixed rate of Rex borrows at the lived rate of and Xanadu borrows at the fixed rate of Xanadu borrows at SM fred Rex borrows at UBOR1M. Then they enter into a swap deal where Xanadu make payments at LIBOR and receives fixed rate payments at 5.25 Res borrows at LIBOR and Xanadu borrows at UBOR+0,5 Xanadu borrows at fred, Rex borrows at UIBOR:14. Then they enter into a swap deal where Xanadu receives payments at UBOR and makes fixed rate payments at 5.25%
