Using the Trident analysis in Exhibits 11.5 and 11.6 where the Euro depreciates, answer the following questions:

Now assume that Trident Germany is now competing in a number of international export markets where most competitors are foreign. Now how would you expect the firms operating exposure to respond to the depreciation of the euro?

Exhibit 11.5 Trident Germany's Valuation: Baseline Analysis 2014 2018 1,000,000 12.80 9.60 29.5% 2015 1,000,000 12.80 9.60 29.5% 2016 1,000,000 12.80 9.60 29.5% 2017 1,000,000 12.80 9.60 29.5% 1,000,000 12.80 9.60 29.5% 1.2000 2017 1.2000 2014 12,800,000 -9,600,000 1.2000 2015 12,800,000 -9,600,000 1.2000 2016 12,800,000 -9,600,000 1.2000 2018 12,800,000 -9,600,000 12,800,000 -9,600,000 -890,000 -890,000 -890,000 -890,000 -890,000 Assumptions Sales volume (units) Sales price per unit Direct cost per unit German corporate tax rate Exchange rate (S/E) Income Statement Sales revenue Direct cost of goods sold Cash operating expenses (fixed) Depreciation Pretax profit Income tax expense Net income Cash Flows for Valuation Net income Add back depreciation Changes in net work ing capital Free cash flow for valuation, in euros Cash flow from opera- tions, in dollars Present Value @ 15% -600,000 1,710,000 -504.450 1,205,550 -600,000 1,710,000 -504.450 1.205.550 -600,000 1,710,000 -504.450 1,205,550 -600,000 1,710,000 -504,450 1,205,550 -600,000 1,710,000 -504.450 1,205,550 1,205,550 600.000 1,205,550 600,000 1,205,550 600,000 1,205,550 600.000 0 1,205,550 600.000 0 0 0 0 1,805,550 1,805,550 1,805,550 1,805,550 1,805,550 $2,166.660 $2,166,660 $2,166,660 $2,166.660 $2,166,660 $7.262.980 Exhibit 11.6 Trident Germany: Case 4 4 - Sale Price, Volume & Cost Increase 2014 1.100.000 14.08 10.00 29.5% 2015 1.100.000 14.08 10.00 2016 1,100,000 14.08 10.00 29.5% 2017 1.100.000 14.08 10.00 29.5% 2018 1.100.000 14.08 10.00 29.5% 29.5% Assumptions Sales volume (units) Sales price per unit Direct cost per unit German corporate tax rate Exchange rate ($/) Income Statement Sales revenue Direct cost of goods sold Cash operating expenses (fixed) Depreciation Pretax prolit Income tax expense Net income Cash Flows for Valuation 1.0000 2014 15,488,000 -11,000,000 1.0000 2015 15,488,000 - 11,000,000 1.0000 2016 15,488.000 - 11,000,000 1.0000 2017 15,488,000 -11,000,000 1.0000 2018 15,488,000 -11,000,000 --890,000 -890,000 -890,000 - 890,000 -890,000 -600,000 2.998,000 -884,410 -600,000 2,998,000 -884,410 - 600,000 2.998,000 884,410 -600.000 2.998,000 -884,410 -600,000 2,998.000 -884,410 2,113,590 2,113,590 2,113,590 2,113,590 2,113,590 2,113,590 600,000 2.113,590 600,000 2,113,590 600,000 2.113,590 600,000 2,113,590 600,000 - 89.907 0 0 0 0 Net income Add back depreciation Changes in net work- ing capital Free cash flow for valuation, in euros Cash flow from opera- tions, in dollars Present Value @ 15% 2.623,683 2,713,590 2,713,590 2,713,590 2,713,590 $2,623,683 $2,713,590 $2,713,590 $2.713,590 $2,713,590 $9,018, 195 Exhibit 11.5 Trident Germany's Valuation: Baseline Analysis 2014 2018 1,000,000 12.80 9.60 29.5% 2015 1,000,000 12.80 9.60 29.5% 2016 1,000,000 12.80 9.60 29.5% 2017 1,000,000 12.80 9.60 29.5% 1,000,000 12.80 9.60 29.5% 1.2000 2017 1.2000 2014 12,800,000 -9,600,000 1.2000 2015 12,800,000 -9,600,000 1.2000 2016 12,800,000 -9,600,000 1.2000 2018 12,800,000 -9,600,000 12,800,000 -9,600,000 -890,000 -890,000 -890,000 -890,000 -890,000 Assumptions Sales volume (units) Sales price per unit Direct cost per unit German corporate tax rate Exchange rate (S/E) Income Statement Sales revenue Direct cost of goods sold Cash operating expenses (fixed) Depreciation Pretax profit Income tax expense Net income Cash Flows for Valuation Net income Add back depreciation Changes in net work ing capital Free cash flow for valuation, in euros Cash flow from opera- tions, in dollars Present Value @ 15% -600,000 1,710,000 -504.450 1,205,550 -600,000 1,710,000 -504.450 1.205.550 -600,000 1,710,000 -504.450 1,205,550 -600,000 1,710,000 -504,450 1,205,550 -600,000 1,710,000 -504.450 1,205,550 1,205,550 600.000 1,205,550 600,000 1,205,550 600,000 1,205,550 600.000 0 1,205,550 600.000 0 0 0 0 1,805,550 1,805,550 1,805,550 1,805,550 1,805,550 $2,166.660 $2,166,660 $2,166,660 $2,166.660 $2,166,660 $7.262.980 Exhibit 11.6 Trident Germany: Case 4 4 - Sale Price, Volume & Cost Increase 2014 1.100.000 14.08 10.00 29.5% 2015 1.100.000 14.08 10.00 2016 1,100,000 14.08 10.00 29.5% 2017 1.100.000 14.08 10.00 29.5% 2018 1.100.000 14.08 10.00 29.5% 29.5% Assumptions Sales volume (units) Sales price per unit Direct cost per unit German corporate tax rate Exchange rate ($/) Income Statement Sales revenue Direct cost of goods sold Cash operating expenses (fixed) Depreciation Pretax prolit Income tax expense Net income Cash Flows for Valuation 1.0000 2014 15,488,000 -11,000,000 1.0000 2015 15,488,000 - 11,000,000 1.0000 2016 15,488.000 - 11,000,000 1.0000 2017 15,488,000 -11,000,000 1.0000 2018 15,488,000 -11,000,000 --890,000 -890,000 -890,000 - 890,000 -890,000 -600,000 2.998,000 -884,410 -600,000 2,998,000 -884,410 - 600,000 2.998,000 884,410 -600.000 2.998,000 -884,410 -600,000 2,998.000 -884,410 2,113,590 2,113,590 2,113,590 2,113,590 2,113,590 2,113,590 600,000 2.113,590 600,000 2,113,590 600,000 2.113,590 600,000 2,113,590 600,000 - 89.907 0 0 0 0 Net income Add back depreciation Changes in net work- ing capital Free cash flow for valuation, in euros Cash flow from opera- tions, in dollars Present Value @ 15% 2.623,683 2,713,590 2,713,590 2,713,590 2,713,590 $2,623,683 $2,713,590 $2,713,590 $2.713,590 $2,713,590 $9,018, 195