International Financial Management
International Financial Management
14th Edition
ISBN: 9780357130698
Author: Madura
Publisher: Cengage
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WAVERS Inc. is a California based firm that specializes in the manufacturing of high- end surfboards. Consumers in the coastal African region  as well as Japan and the UK have recently discovered the joys of surfing. WAVERS has hired you as a consultant to provide advice regarding global expansion. They are debating whether to continue exporting to the UK or possibly licensing the technology to a London firm that has expressed some interest in manufacturing the product in the UK. Currently, Wavers return on investment from their domestic market is 35% with a net profit of $5 million from $20 million in sales.  Labor is roughly 50% of total expenses and 20% cheaper in the UK than the US. Costs other than labor in the UK are roughly on par with the US.  Discuss whether they should license or continue to export and the contingencies that need to be considered. If they license, what should the royalty rate be?  Provide any assumptions that you have made
Osama Co. is a listed company operating in the textile industry. Osama Co’s board of directors met recently to discuss a new strategy for the business. The proposal put forward was to sell all the old plant and machinery and use this fund as well as borrow from market to purchase new plant and equipment. The new plant and machinery are more productive and meet the current standard quality required by the international buyers. It is also argued that new plant is more energy efficient and environment friendly that gives more advantage when facing international competitors.   The proposal stated that the funds raised from the sale of the old plant and machinery would be used to buy the new plant and machinery.   New borrowing for the balance amount will be made from local bank which offered lowest rate. Since inflation is on higher side compared to last few years so cost of borrowing is on higher side which will increase firm cost of capital.   The board of directors are of the opinion…
Osama Co. is a listed company operating in the textile industry. Osama Co’s board of directors met recently to discuss a new strategy for the business. The proposal put forward was to sell all the old plant and machinery and use this fund as well as borrow from market to purchase new plant and equipment. The new plant and machinery are more productive and meet the current standard quality required by the international buyers. It is also argued that new plant is more energy efficient and environment friendly that gives more advantage when facing international competitors.   The proposal stated that the funds raised from the sale of the old plant and machinery would be used to buy the new plant and machinery.   New borrowing for the balance amount will be made from local bank which offered lowest rate. Since inflation is on higher side compared to last few years so cost of borrowing is on higher side which will increase firm cost of capital.   The board of directors are of the opinion…
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