Valuation of Dollar General’s International Business. In addition to all of its stores in the U.S., Let’s assume Dollar General, a retailer has 26 stores in Argentina, 302 stores in Brazil, 289 stores in Canada, 73 stores in China, 889 stores in Mexico, and 335 stores in the U.K. Consider the value of Dollar General as being composed of two parts, a U.S. part (due to business in the U.S.) and a non-U.S. part (due to business in other countries).

a) What are the 3 main elements used in determining the value of an MNC as per the model outlined on pages 14 to 20 of the textbook?   Explain in detail using the 3 elements of the valuation model how you would step by step determine the net present value (in US dollars) of the non-U.S. part of the business

b) In the case of each currency state whether you believe the foreign currency will appreciate or depreciate relative to the US $ over the next 12 months. Give one reason why?  

c) Around the world interest rates are generally low. If over the next 12 months interest rates increase by 2 or 3% points in all markets around the world how will this change likely affect the value of the Dollar General stock traded on the on the New York Stock Exchange? Using the three elements in the MNC valuation formula, plus the behavior of consumers, and the behavior of investors to explain your answer.

d) Which exchange rate should Dollar General be most concerned about? Pick just one! State reasons why?