Question
Using either or both charts below, determine the Cash Flows inUSD before Taxes for the 3 hypothetical exchange rates of 19 pesosper USD, 20.5 pesos
Using either or both charts below, determine the Cash Flows inUSD before Taxes for the 3 hypothetical exchange rates of 19 pesosper USD, 20.5 pesos per USD, and 22 pesos per USD. What is theworst case scenario for cash flows, rounded to the nearest milliondollars, in this model? All Sales and Expenses are in Millions U.S.Business Mexico Business Sales $250 2000 pesos Cost of Materials$50 1000 pesos Operating Expenses $80 300 pesos Interest Expenses$10 30 pesos Cash Flows + $110 + 670 pesos Impact of PossibleExchange Rates on Cash Flows All Sales and Expenses are in MillionsMXN per USD = 19 pesos per dollar MXN per USD = 20.5 pesos perdollar MXN per USD = 22 pesos per dollar Sales US Sales $250 $250$250 Mexico Sales 2000 pesos = 2000 pesos = 2000 pesos = TotalSales in USD Cost of Materials and Operating Expenses Cost of USMaterials $50 $50 $50 Cost of Mexico Materials 1000 pesos = 1000pesos = 1000 pesos = Total Cost of Materials in USD OperatingExpenses U.S. Operating Expenses $80 $80 $80 Mexico OperatingExpenses 300 pesos = 300 pesos = 300 pesos = Total OperatingExpenses in USD Interest Expenses U.S. Interest Expense $10 $10 $10Mexico Interest Expense 30 pesos = 30 pesos = 30 pesos = TotalInterest Expenses in USD Cash Flows in USD Before Taxes Group ofanswer choices
a-$143 million
b- $145 million
c-$140 million
d-$138 million
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