Chapter 11, Problem 39QA

1. Perth International  Co., an Australian multinational company, forecasts 63 million Australian dollars (A$) earnings next three years.  It expects 50 million Chinese yuan (CNY), 44 million Indian rupees (INR) and 39 million Malaysian ringgit (MYR) proceeds of its three subsidiaries in year-one. It also forecasts the year-one exchange rates A$0.2447/CNY, A$0.043/INR and A$0.5791/MYR. Calculate the total Australian dollar (A$) cash flow for year-one. (enter the whole number with no sign or symbol) 2.  Perth International anticipates a 5.06 per cent increase in the year-one income of its subsidiaries in year-two. It has information that the current 4.83 per cent, 8.76 per cent, 13.53 per cent and 11.08 per cent nominal interest rate in Australia, China, India and Malaysia, respectively, will remain the same in the next three years. Due to foreign currency higher nominal interest rate, subsidiaries will invest 23 per cent, 56 per cent and 45 per cent of their year-two earnings in China,…

An investment in China yields these expected after-tax renminbi cash flows (in billions). year  CF 0     -495 1    146 2     297 3     246 You know the following financial variables Required Return US -15.00% Required Return China -11.745% Expected Inflation US- 6.0% Expected Inflation China- 3.0% Spot Rate- $ 0.14 Assume the international parity conditions hold. Calculate NPV by converting renminbi to dollars at expected future spot rates and discounting in dollars. (X.XXX) Please answer very soon will give rating surely

An investment in China yields these expected after-tax renminbi cash flows (in billions). year CF 0 -508 1 155 2 308 3 259 You know the following financial variables Required Return US 15.00% Required Return China 11.745% Expected Inflation US 6.0% Expected Inflation China 3.0% Spot Rate $ 0.17 Assume the international parity conditions hold. Calculate NPV by converting renminbi to dollars at expected future spot rates and discounting in dollars. (X.XXX)