Comparing International Projects Savannah, Inc, a manufacturer of clothing, wants to increase its market share by acquiring a target producing a popular clothing line in Europe. This clothing line is well established. Forecasts indicate that the euro will remain relatively stable over the life of the project. Marquette, Inc., wants to increase its market share in the tablet computer market by acquiring a target in Thailand that currently produces radios and converting the operations to produce tablets. Forecasts indicate that the baht will depreciate over the life of the project. Funds resulting from both Savannah’s and Marquette’s projects will be remitted to the respective U.S. parent on a regular basis. Which target do you think will result in a higher net present value? Why?

FindFind

International Financial Management

14th Edition
Madura
Publisher: Cengage
ISBN: 9780357130698
FindFind

International Financial Management

14th Edition
Madura
Publisher: Cengage
ISBN: 9780357130698

Solutions

Chapter 15, Problem 5QA
Textbook Problem

Comparing International Projects Savannah, Inc, a manufacturer of clothing, wants to increase its market share by acquiring a target producing a popular clothing line in Europe. This clothing line is well established. Forecasts indicate that the euro will remain relatively stable over the life of the project. Marquette, Inc., wants to increase its market share in the tablet computer market by acquiring a target in Thailand that currently produces radios and converting the operations to produce tablets. Forecasts indicate that the baht will depreciate over the life of the project. Funds resulting from both Savannah’s and Marquette’s projects will be remitted to the respective U.S. parent on a regular basis. Which target do you think will result in a higher net present value? Why?

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