Loose Leaf for Foundations of Financial Management Format: Loose-leaf
17th Edition
ISBN: 9781260464924
Author: BLOCK
Publisher: Mcgraw Hill Publishers
expand_more
expand_more
format_list_bulleted
Concept explainers
Textbook Question
Chapter 7, Problem 4P
Postal Express has outlets throughout the world. It also keeps funds for transactions purposes in many foreign countries. Assume in 2010 it held 240,000 reals in Brazil worth 170,000 dollars. It drew 12 percent interest, but the Brazilian real declined 24 percent against the dollar.
a. What is the value of its holdings, based on U.S. dollars, at year-end?
b. What is the value of its holdings, based on U.S. dollars, at year-end if instead it drew 9 percent interest and the real went up by 13 percent against the dollar?
Expert Solution & Answer
Want to see the full answer?
Check out a sample textbook solutionStudents have asked these similar questions
Postal Express has outlets throughout the world. It also keeps funds for transactions purposes in many foreign countries. Assume in 2010 it held 320,000 reals in Brazil worth 250,000 dollars. It drew 13 percent interest, but the Brazilian real declined 26 percent against the dollar.a. What is the value of its holdings, based on U.S. dollars, at year-end? (Do not round intermediate calculations.)
b. What is the value of its holdings, based on U.S. dollars, at year-end if instead it drew 10 percent interest and the real went up by 14 percent against the dollar? (Do not round intermediate calculations.)
Postal Express has outlets throughout the world. It also keeps funds for transactions purposes in many foreign countries. Assume in 2010 it held 280,000 reals in Brazil worth 210,000 dollars. It drew 9 percent interest, but the Brazilian real declined 18 percent against the dollar.
a. What is the value of its holdings, based on U.S. dollars, at year-end? (Do not round intermediate calculations.)
b. What is the value of its holdings, based on U.S. dollars, at year-end if instead it drew 6 percent interest and the real went up by 10 percent against the dollar? (Do not round intermediate calculations.)
Postal Express has outlets throughout the world. It also keeps funds for transactions purposes in many foreign countries. Assume in 2010 it held 420,000 reals in Brazil worth 350,000 dollars. It drew 9 percent interest, but the Brazilian real declined 18 percent against the dollar.
What is the value of its holdings, based on U.S. dollars, at year-end?
Note: Do not round intermediate calculations.
What is the value of its holdings, based on U.S. dollars, at year-end if instead it drew 6 percent interest and the real went up by 10 percent against the dollar?
Note: Do not round intermediate calculations.
Chapter 7 Solutions
Loose Leaf for Foundations of Financial Management Format: Loose-leaf
Ch. 7 - Prob. 1DQCh. 7 - Prob. 2DQCh. 7 - Why would a financial manager want to slow down...Ch. 7 - Use The Wall Street Journal or some other...Ch. 7 - Why are Treasury bills a favorite place for...Ch. 7 - Explain why the bad debt percentage or any other...Ch. 7 - What are three quantitative measures that can be...Ch. 7 - Prob. 8DQCh. 7 - What does the EOQ formula tell us? What assumption...Ch. 7 - Why might a firm keep a safety stock? What effect...
Ch. 7 - If a firm uses a just-in-time inventory system,...Ch. 7 - City Farm Insurance has collection centers across...Ch. 7 - Prob. 2PCh. 7 - Orbital Communications has operating plants in...Ch. 7 - Postal Express has outlets throughout the world....Ch. 7 - Thompson Wood Products has credit sales of...Ch. 7 - Oral Roberts Dental Supplies has annual sales of...Ch. 7 - Knight Roundtable Co. has annual credit sales of...Ch. 7 - Darla’s Cosmetics has annual credit sales of...Ch. 7 - Barney’s Antique Shop has annual credit sales of...Ch. 7 - Mervyn’s Fine Fashions has an average collection...Ch. 7 - Route Canal Shipping Company has the following...Ch. 7 - Nowlin Pipe & Steel has projected sales of 72,000...Ch. 7 - Fisk Corporation is trying to improve its...Ch. 7 - Prob. 14PCh. 7 - Diagnostic Supplies has expected sales of 84,100...Ch. 7 - Wisconsin Snowmobile Corp. is considering a switch...Ch. 7 - Johnson Electronics is considering extending trade...Ch. 7 - Henderson Office Supply is considering a more...Ch. 7 - Fast Turnstiles Co. is evaluating the extension of...Ch. 7 - Slow Roll Drum Co. is evaluating the extension of...Ch. 7 - Global Services is considering a promotional...Ch. 7 - Problems 22-25 are a series and should be...Ch. 7 - Problems 22-25 are a series and should be...Ch. 7 - Problems 22-25 are a series and should be...Ch. 7 - Problems 22-25 are a series and should be...
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, finance and related others by exploring similar questions and additional content below.Similar questions
- Postal Express has outlets throughout the world. It also keeps funds for transactions purposes in many foreign countries. Assume in 2010 it held 230,000 reals in Brazil worth 160,000 dollars. It drew 11 percent interest, but the Brazilian real declined 21 percent against the dollar.a. What is the value of its holdings, based on U.S. dollars, at year-end? (Do not round intermediate calculations.) Value of the holdings b. What is the value of its holdings, based on U.S. dollars, at year-end if instead it drew 8 percent interest and the real went up by 12 percent against the dollar? (Do not round intermediate calculations.) Value of the holdingsarrow_forwardPostal Express has outlets throught the world. It also keeps funds for transactions purposes in many foreign countries. Assume that in 2010 it help 200,000 reals in Brazil worth 130,000 dollars. It drew 10 percent interest , but the Brazilian real declined 20 percent aganist the dollar. a) What is the calue of holdings , based on U.S. dollars, at the year end?arrow_forwardPostal Express has outlets throught the world. It also keeps funds for transactions purposes in many foreign countries. Assume that in 2010 it help 200,000 reals in Brazil worth 130,000 dollars. It drew 10 percent interest , but the Brazilian real declined 20 percent aganist the dollar. B) What is the value of its holdings , based on U.S. dollars , at year-end if instead it drew 8 percent interest and the real went up by 12 percent aganist the dollar?arrow_forward
- Megahurtz International Car Rentals has rent -a-car outlets throughout the world. It keeps funds for transaction purposes in many foreign currencies. Assume that in 200XX it held 100,000 reals in Brazil worth $42,000. It earned. 12 percent interest, but the real declined 20 percent against the dollar. a. What is the value of its holdings, based on Canadian dollars, at year-end? ( Do not round intermediate calculations.) Value of the holdings Sb. What is the value of its holdings, based on Canadian dollars, at year end if it earned 9 percent and the real went up by 10 percent against the dollar? (Do not round intermediate calculations.) Value of the holdings Sarrow_forwardSuppose that California Co., a U.S. based MNC, seeks to capitalize a difference in interest rates between euros and British pounds via the use of a carry trade. In particular, after 1 month, funds invested in euros will yield a 0.50% percent return, while funds invested in pounds will yield a return of 2.00% percent. Currently the spot rate of the British pound is $1.00 while the spot rate of the euro is $0.80. In other words, the pound is worth 1.25 euros. California Co. expects these spot rates to remain constant over the next month. After repaying their euro loan, California Co. has 211,200 pounds remaining. Assume that the exchange rate is still $1.00 per pound. These pounds are equivalent to $ , which represents a profit of $ over the initial $200,000 that California Co. used from their own funds.arrow_forwardSinTell has USD $24 million in excess cash that it has invested in China at an annual interest rate of 11 percent. The U.S. interest rate is 4 percent. By how much would the Chinese yuan have to depreciate to cause such a strategy to backfire? Give your answer in decimal point, rounding up to 4 decimal places.arrow_forward
- Vogl Co. is a U.S. firm conducting a financial plan for the next year. It has no foreign, subsidiaries, but more than half of it sale are form exports. Its foreign cash inflows to be received from exporting and cash outflow to be paid for imported supplies over the next year are shown n the following table: Currency total inflow total outflow Canadian dollar (C$) C $32,000,000 C $ 2,000,000 New Zealand dollar (NZ$) NZ $ 5,000,000 NZ $1,000,000 Mexican peso (MXP) MXP 11,000,000 MXP 10,000,000 Singapore dollar (s$) S$ 4, 000,000 8000,000 The spot rate and one-year forward rates as of today are shown below: Currency spot rate one-year forward rate C$ $.90 .93 NZ$ .60 .59 MXP .18 .15 S$ .65 .64 Questions 1. Based on the information provided, determine Vogl’s net exposure to each foreign currency in dollars. 2. Assume that today’s spot rate is used as a forecast of the future spot rate one year from now. The New Zealand dollar, Mexican peso, and Singapore dollars are expected to move in…arrow_forwardThe treasurer of a major U.S. firm has $43,129,609 to invest for three months. The annual interest rate in the United States is 0.37% per month. The interest rate in Great Britain is 0.56% per month. The spot exchange rate is £0.7, and the three-month forward rate is £0.74. Ignoring transaction costs, what would be the NPV of investing in Great Britain as opposed to invest in the U.S.?arrow_forwardIBM purchased computer chips from NEC, a Japanese electronics concern, and was billed 1500 million payable in three months. Currently, the spot exchange rate is v110/S and the three-month forward rate is ¥100/S. The three-month money market interest rate is 12 percent per annum in the United States and 9 percent per annum in Japan. The management of IBM decided to use a money market hedge to deal with this yen account payable Explain the process of a money market hedge and compute the dollar cost of meeting the yen obligation b. Conduct a cash flow analysis of the money market hedge a.arrow_forward
- IBM purchased computer chips from Toshiba, a Japanese electronics concern, and was billed ¥250 million payable in three months. Currently, the spot exchange rate is ¥105/$ and the three-month forward rate is ¥100/$. The three-month money market interest rate is 8% per year in the U.S. and 7% per year in Japan. The management of IBM decided to use the money market hedge to deal with this yen account payable. a. Explain the process of a money market hedge from this deal and compute the dollar cost of meeting the yen obligation. b. Conduct the cash flow analysis of the money market hedge.arrow_forwardSuppose then that we have three London seats, New York and Madrid In the first, the buyer type is 109,590 Yen per Dollar, in London the selling rate is 180,000 Yen per Pound Sterling while in New York is 1,677 dollars per British Pound Suppose we have 100,000,000 yen Carry out the arbitrage indicate the gain in terms absolute and percentage termsarrow_forward
arrow_back_ios
arrow_forward_ios
Recommended textbooks for you
- EBK CONTEMPORARY FINANCIAL MANAGEMENTFinanceISBN:9781337514835Author:MOYERPublisher:CENGAGE LEARNING - CONSIGNMENTIntermediate Financial Management (MindTap Course...FinanceISBN:9781337395083Author:Eugene F. Brigham, Phillip R. DavesPublisher:Cengage Learning
EBK CONTEMPORARY FINANCIAL MANAGEMENT
Finance
ISBN:9781337514835
Author:MOYER
Publisher:CENGAGE LEARNING - CONSIGNMENT
Intermediate Financial Management (MindTap Course...
Finance
ISBN:9781337395083
Author:Eugene F. Brigham, Phillip R. Daves
Publisher:Cengage Learning
Financial Risks - Part 1; Author: KnowledgEquity - Support for CPA;https://www.youtube.com/watch?v=mFjSYlBS-VE;License: Standard youtube license