Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Doohicky Devices. Doohickey Devices, Inc., manufactures design components for personal computers. Until the present, manufacturing has been subcontracted to other companies, but for reasons of

image text in transcribed
image text in transcribed
Doohicky Devices. Doohickey Devices, Inc., manufactures design components for personal computers. Until the present, manufacturing has been subcontracted to other companies, but for reasons of quality control Doohicky has decided to manufacture the components itself in Asia. Analysis has narrowed the choice to two possibilities, Penang, Malaysia, and Manila, the Philippines. At the moment only the summary of expected, after-tax, cash flows displayed in the popup tablo, E. is available. Although most operating outflows would be in Malaysian ringgit or Philippine pesos, some additional U.S. dollar cash outflows would be necessary, as shown in the above popup table. The Malaysia ringgit currently trades at RM3.8963/$ and the Philippine peso trades at Ps49.81/$. Doohicky expects the Malaysian ringgit to appreciate 2.2% per year against the dollar, and the Philippine peso to depreciate 4.9% per year against the dollar. If the weighted average cost of capital for Doohicky Devices is 15.0%, which project looks more promising? Calculate the net dollar cash flows from the operations in Penang, Malysia for years 2012 through 2014 below: (Round the exchange rate to four decimal places and the dollar amount to the nearest cent.) 01 urd 2012 2013 2014 Doohicky in Penang (After-tax) Net cash flows (ringgit) RM (28,000) RM 8,200 RM 6,700 3.8963 Expected exchange rate (ringgit/S) Ispot / (1 +0.022) Cash flows (S) Cash outflows (S) Net total cash flows ($) $ (140.00) (140.00) $ $ $ rant Enter any number in the edit fields and then click Check Answer. 206 parts remaining Clear All Check Answer i Data Table 2012 (28,000) 2013 8,200 (140) 2014 6,700 (140) 2015 7,500 (160) 2016 9,100 (130) 2017 8,000 chicky in Penang (after-tax) ringgit cash flows ar cash outflows hicky in Manila (after-tax) peso cash flows ar cash outflows (580,000) 200,000 (100) 180,000 190,000 220,000 220,000 (200) (300) (400) # Print Done

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

Step: 3

blur-text-image

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

Personal Finance

Authors: Jack Kapoor

13th Edition

1260799735, 9781260799736

More Books

Students also viewed these Finance questions

Question

Explain and discuss the term utility and utilitarism

Answered: 1 week ago

Question

8. What are the costs of collecting the information?

Answered: 1 week ago

Question

1. Build trust and share information with others.

Answered: 1 week ago