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Using the cost and revenue information shown for DeKalb, Inc., determine how the costs, revenue, and cash flow items would be affected by three
Using the cost and revenue information shown for DeKalb, Inc., determine how the costs, revenue, and cash flow items would be affected by three possible exchange rate scenarios for the New Zealand dollar (NZ$): (1) NZ$ = $0.45, (2) NZ$ = $0.50, and (3) NZ$ = $0.55. (Assume U.S. sales will be unaffected by the exchange rate.) REVENUE AND COST ESTIMATES: DEKALB, INC. (IN MILLIONS OF U.S. DOLLARS AND NEW ZEALAND DOLLARS) U.S. Business Sales $700 Cost of Materials 450 Operating Expenses 200 Interest Expense Cash Flow 100 -$50 New Zealand Business NZ$700 300 0 NZ$400 Assume that NZ$ earnings will be remitted to the U.S. parent at the end of the period. Ignore possible tax effects. Round your answers to the nearest dollar. Sales U.S. $ New Zealand Total NZ$700 = $ Cost of Materials NZ$ = $0.45 700 $ NZ$700 = $ U.S. $ 450 +A New Zealand NZ$300 NZ$300 = Total $ $ NZ$ = $0.50 700 $ NZ$700 = $ NZ$ = $0.55 700 $ 450 $ 450 NZ$300 = $ Operating expenses $ 200 Interest expenses $ 100 $ 200 100 Cash flow The preceding table shows that DeKalb Inc. is adversely affected by a -Select- New Zealand dollar value. 200 100
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