Question
Use the following information to answer Questions 34 - 36 A multinational company has three subsidiaries located in the United States, Switzerland, and Great Britain.
Use the following information to answer Questions 34 - 36
A multinational company has three subsidiaries located in the United States, Switzerland, and Great Britain. The company recently set up a multilateral netting center to help manage its foreign exchange exposure. Listed below are the average monthly invoices sent from each country to each of the other subsidiaries with which it does business. The company uses the U.S. dollar as the common referencing currency.
| Existing Exchange Rates: |
| Swiss franc (SF) = $1.03 |
| British pound () = $1.25 |
|
|
| United States to Swiss $100 |
| United States to Great Britain $250 |
|
|
| Swiss to United States SF300 |
| Swiss to Great Britain SF150 |
|
|
| Great Britain to Swiss 200 |
| Great Britain to United States 100 |
34. What is the net cash flow for the subsidiary in the United States?
| a. | $29.5 | |
| b. | -$29.5 | |
| c. | -$84 | |
| d. | $84 |
35. What is the net cash flow for the subsidiary in the Great Britain?
| a. | $29.5 | |
| b. | $84 | |
| c. | -$84 | |
| d. | -$29.5 |
36. What is the net cash flow for the subsidiary in Swiss?
| a. | $113.5 | |
| b. | -$113.5 | |
| c. | $54.5 | |
| d. | -$54.5 |
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Principles Of Managerial Finance
Authors: Chad J. Zutter, Scott Smart
16th Edition
0136945880, 978-0136945888
