Week 7 Homework
Mohamed E. Abdelrahman
Prof: James Glenn
International Finance FIN: 535
Strayer University
Spring 2013
15. DFI Strategy:
A. What comparative advantage does JCPenney have when establishing a store in a foreign country, relative to an independent variety store?
B. Why might the overall risk of JCPenney decrease or increase as a result of its recent global expansion?
C. JCPenney has been more cautious about entering China. Explain the potential obstacles associated with entering China.
ANSWER:
A. J.C. Penney has name recognition, which could result in customer trust, and therefore a
stronger demand for its products. It also has marketing expertise that it applies to each store. It
also has*…show more content…*

In this case, it would have to pay back a lump sum total of 7 million Euros at the end of 8 years to repay the loan. There are no interest payments on this debt. The way in which this financing deal is structured, none of the payment is tax-deductible. Determine the NPV if Cantoon uses the forward rate instead of the spot rate to forecast the future spot rate of the euro, and elects to partially finance the acquisition. ANSWER a. Discount factor based on a required return of 20% for 8 years = .232 $ to be received in 8 years = 12,000,000 Euros × $1.2 = $14,400,000 PV = $14,400,000 (1 + .2)8 = $3,340,800 NPV = $3,340,800 – $4,000,000 = –$659,200 b. The forward rate premium is: p = (1 + .05)8 – 1 = (1.48)/1.718) – 1 = –13.85% (1 + .07)8 FR premium over 8 years = –.13.85% Forecast of euro in 8 years = $1.20 × [1 + (–13.85%)] = 1.0338. Euros to be received in 8 years = 12 million Euros – 7 million Euros = 5 million Euros Dollars to be received in 8 years = 5 million Euros × $1.0338 = $5,169,000 PV of $ to be received in 8 years = $5,169,000 (1 + .20)8 = $1,202,144 If 3 million Euros are borrowed, this covers the equivalent of $3,600,000, since the euro’s spot rate is equal to $1.20. Therefore, the parent needs to provide an initial outlay of $400,000

In this case, it would have to pay back a lump sum total of 7 million Euros at the end of 8 years to repay the loan. There are no interest payments on this debt. The way in which this financing deal is structured, none of the payment is tax-deductible. Determine the NPV if Cantoon uses the forward rate instead of the spot rate to forecast the future spot rate of the euro, and elects to partially finance the acquisition. ANSWER a. Discount factor based on a required return of 20% for 8 years = .232 $ to be received in 8 years = 12,000,000 Euros × $1.2 = $14,400,000 PV = $14,400,000 (1 + .2)8 = $3,340,800 NPV = $3,340,800 – $4,000,000 = –$659,200 b. The forward rate premium is: p = (1 + .05)8 – 1 = (1.48)/1.718) – 1 = –13.85% (1 + .07)8 FR premium over 8 years = –.13.85% Forecast of euro in 8 years = $1.20 × [1 + (–13.85%)] = 1.0338. Euros to be received in 8 years = 12 million Euros – 7 million Euros = 5 million Euros Dollars to be received in 8 years = 5 million Euros × $1.0338 = $5,169,000 PV of $ to be received in 8 years = $5,169,000 (1 + .20)8 = $1,202,144 If 3 million Euros are borrowed, this covers the equivalent of $3,600,000, since the euro’s spot rate is equal to $1.20. Therefore, the parent needs to provide an initial outlay of $400,000

Related

- Decent Essays
## Matt 540 Week 7 Homework

- 1517 Words
- 7 Pages

Financing Health Care How societies pay for health care, and how many resources they devote to health, affects both the care people can get and its quality. In most developed countries, health care is paid for largely by the government or an organization associated with it, using taxes collected from citizens. The United Kingdom, for example, has a “single-payer” system in which the government pays directly for care; in France and Germany, the government collects taxes to fund part of the government

- 1517 Words
- 7 Pages

Decent Essays - Decent Essays
## Math 221 Homework Week 7 - Latest

- 1541 Words
- 7 Pages

Math 221 Homework Week 7 - LATEST IF You Want To Purcahse A+ Work then Click The Link Below For Instant Down Load http://www.acehomework.net/wp-admin/post.php?post=3168&action=edit IF You Face Any Problem Then E Mail Us At JOHNMATE1122@GMAIL.COM 1. Math 221 Homework Week 7 - LATEST 2. 3. 4. Use the given statement to represent a claim. Write it’s complement and state which is Ho and which is Ha. u> 635 Find the complement of the claim. u < 635 2. A null and alternative hypothesis

- 1541 Words
- 7 Pages

Decent Essays - Satisfactory Essays
## Weeks 1 - 7 Homework Answer Key

- 3549 Words
- 15 Pages

FI516 – WEEK 1 – HOMEWORK ANSWER KEY Problem 14-10 14-10 a. 1. 2011 Dividends = (1.10)(2010 Dividends) = (1.10)($3,600,000) = $3,960,000 2. 2010 Payout = $3,600,000/$10,800,000 = 0.33 = 33% 2011 Dividends = (0.33)(2009 Net income) = (0.33)($14,400,000) = $4,800,000 (Note: If the payout ratio is rounded off to 33%, 2011 dividends are then calculated as $4,752,000.) 3. Equity financing = $8,400,000(0.60) = $5,040,000 2011 Dividends = Net income - Equity financing = $14,400,000 - $5,040,000

- 3549 Words
- 15 Pages

Satisfactory Essays - Satisfactory Essays
## Mat 540 Week 7 Homework Chapter 3

- 711 Words
- 3 Pages

MAT 540 Week 7 Homework Chapter 3 http://homeworkfy.com/downloads/mat-540-week-7-homework-chapter-3/ To Get this Tutorial Copy & Paste above URL Into Your Browser Hit Us Email for Any Inquiry at: Homeworkfy@gmail.com Visit our Site for More Tutorials: (http://homeworkfy.com/ ) 1. Southern Sporting Good Company makes basketballs and footballs. Each product is produced from two resources rubber and leather. Each basketball produced results in a profit of $11 and each football earns $15 in

- 711 Words
- 3 Pages

Satisfactory Essays - Satisfactory Essays
## Elementary Algebra and Study Plan

- 2894 Words
- 12 Pages

and Preparation Week Two Videos Individual MyMathLab® Week 2 Homework Individual Week 2 Study Plan 5 5 Complete the Week 2 Homework Assignment in MyMathLab®. Day 5 40 Complete the Week 2 Study Plan Description: The Study Plan in MyMathLab® (MML) is designed to give each student additional opportunities to practice math topics MML has identified for you as needing further progress to achieve mastery. Review your Study Plan in MML after completing the Exercises homework assignment for

- 2894 Words
- 12 Pages

Satisfactory Essays - Satisfactory Essays
## Engl 216 Entire Course Guide Week 1 - 8

- 2460 Words
- 10 Pages

Course Guide Week 1 - 8 Purchase here http://devrycourse.com/ENGL%20216/engl-216-entire-course-guide-week-1-8 Product Description ENGL 216 Week 1 Homework Assignment ENGL 216 Week 1 Discussion Question 1 ENGL 216 Week 1 Discussion Question 2 ENGL 216 Week 2 Homework, A Proposal to the Student Council ENGL 216 Week 2 Course Project; Course Project Launch & Topic ENGL 216 Week 2 Discussion Question 1 ENGL 216 Week 2 Discussion Question 2 ENGL 216 Week 3 Homework Assigment; Memorandum

- 2460 Words
- 10 Pages

Satisfactory Essays - Decent Essays
## Good Performances In Bulimia-Idaho

- 1043 Words
- 5 Pages

online courses. One of these characteristics is the different academic development from online students like homework, quizzes, and tests. In fact, in the last years there have many assumptions from different professionals that a good performance in homework will cause or will be related to good performances in quizzes and tests. The purpose of this paper is to show that good performances in homework

- 1043 Words
- 5 Pages

Decent Essays - Satisfactory Essays
## Do Students Need Homework Out To Students In High School?

- 557 Words
- 3 Pages

Homework must not be given out to students in high school. 1. Because many students spend at least 6-7 hours at school, have additional after school commitments and having more homework may cause stress.Children work hard at school everyday and they need the time to relax their brains and rest their bodies. Homework is when you are given a task, sometimes more than one, that are required to be done at home. Homework can consist of Maths, Reading, Writing, and many more subjects it can also be

- 557 Words
- 3 Pages

Satisfactory Essays - Satisfactory Essays
## Week 3 Aib Problem Solutions

- 726 Words
- 3 Pages

AIB Homework Problem Solutions Problem 1 The following data were obtained from a project to create a new portable electronic. Activity A B C D E F G H I Duration 5 Days 6 Days 8 Days 4 Days 3 Days 5 Days 5 Days 9 Days 12 Days Predecessors ------A, B C D E, F D G Step 1: Construct a network diagram for the project. (NOTE: EF for activity H should be 19) March 2014 1 AIB Homework Problem Solutions Step 2: Answer the following questions: (15 points total)

- 726 Words
- 3 Pages

Satisfactory Essays - Decent Essays
## Why Students Should Start School Start Time

- 914 Words
- 4 Pages

school start times pushed back till later morning hours,and 64.6% of YHS students think that we should start school at 9:00 AM. instead of 7:50 AM. THe students of YHS and other schools in the country should be able to choose their own school start times because kids are stressed and not getting good grades, not focused because they are exhausted from doing homework and studying until midnight and past that, finally a lot of students do not show up to school on time or at all because they get little

- 914 Words
- 4 Pages

Decent Essays