Explain how the cash flow situation of the greek tour

Assignment Help Finance Basics
Reference no: EM131117023

Nantucket Travel Agency specializes in tours for American tourists. Until recently, all of Its business was in the United States. It just established a subsidiary in Athens, Greece, which provides tour services in the Greek islands for American tourists. It rented a shop near the port of Athens. It also hired residents of Athens who could speak English and provide tours of the Greek islands. The sub sidiary's main costs are rent and salaries for its employees and the lease of a few large boats in Athens that it uses for tours. American tourists pay for the entire tour in dollars at Nantucket's main U.S. office before they depart for Greece.

a. Explain why Nantucket may be able to effectively capitalize on international opportunities such as the Greek island tours.

b. Nantucket is privately owned by owners who reside in the United States and work in the main office. Explain possible agency problems associated with the creation of a subsidiary in Athens, Greece. How can Nantucket attempt to reduce these agency costs?

c. Greece's cost of labor and rent are relatively low. Explain why this information is relevant to Nantucket's decision to establish a tour business in Greece.

d. Explain how the cash flow situation of the Greek tour business exposes Nantucket to exchange rate risk. Is Nantucket favorably or unfavorably affected when the euro (Greece's currency) appreciates against the dollar? Explain.

e. Nantucket plans to finance its Greek tour business. Its subsidiary could obtain loans in euros from a bank in Greece to cover its rent, and its main office could pay off the loans over time. Alternatively, its main office could borrow dollars and would periodically convert dollars to euros to pay the expenses in Greece. Does either type of loan reduce the exposure of Nantucket to exchange rate risk? Explain.

f. Explain how the Greek island tour business could expose Nantucket to country risk.

Reference no: EM131117023

Questions Cloud

Two theories of intelligence : Explain two theories of intelligence, referring to research evidence in your answer. In your answer you may wish to include:
Separation-deprivation or privation in childhood : What are the possible long term implications for children who have experienced separation, deprivation or privation in childhood? Refer to research in your answer.
Subsequent events your firm has been engaged : In 2008, the ending inventory was overstated by $183,000. The ending inventories for 2009 and2010 were correctly computed.
Four primary service outputs of spatial convenience : Why are the four primary service outputs of spatial convenience, lot size, waitingtime, and product variety important to logistics management? Provide examples ofcompeting firms that differ in the level of each service output provided tocustomers.
Explain how the cash flow situation of the greek tour : Greece's cost of labor and rent are relatively low. Explain why this information is relevant to Nantucket's decision to establish a tour business in Greece. Explain how the cash flow situation of the Greek tour business exposes Nantucket to exchange ..
Digital signature to the document : Your boss came by and told you to add a digital signature to the document you just created for him. He seems to think you know what that is and how to do it in Office, and wants it done ASAP. But this is totally new to you
Demonstrate what type of legal or political information : Pick a country of your choice and demonstrate what type of legal or political information you would have to collect to be able to advertise a product within the country. You may pick any kind of product for your example and you may consider any media..
Can you do any outlook calendar scheduling : What is your experience with platforms such as Facebook, LinkedIn, Twitter, Instagram and Snapchat? How are your writing skills and can they be applied to a Newsletter? How well do you take notes for a meeting?
Demonstrate your understanding of operant conditioning : Demonstrate your understanding of classical and operant conditioning through application and comparison - Explain how they are alike and how they differ, using the two scenarios along with the lesson materials to support your points.

Reviews

Write a Review

Finance Basics Questions & Answers

  Financial reporting and analysis

Finance is about Gunns Ltd, a company in dealing with forestry products in Australia. The company has also been listed in Australian Stock Exchange. As many companies producing forestry products, even Gunns Ltd is facing various problems. Due to the ..

  A report on financial accounting

This report is specific for a core understanding for Financial Accounting and its relevant factors.

  Describe the types of financial ratios

Describe the types of financial ratios and other financial performance measures that are used during venture's successful life cycle.

  Differences between sole proprietorship and corporation

Briefly describe the major differences between a sole proprietorship and a corporation

  Prepare a cash budget statement

Calculate the expected value of the apartment in 20 years' time. What is the mortgage loan repayment at the beginning of each month

  What are the implied interest rates

What are the implied interest rates in Europe and the U.S.?

  State pricing theory and no-arbitrage pricing theory

State pricing theory and no-arbitrage pricing theory

  Small business administration

Identify the likely stage for each venture and describe the type of financing each venture is likely to be seeking and identify potential sources for that financing.

  Effect of financial leverage

The Effect of Financial Leverage and working capital management

  Evaluate the basis for the payment to the lender

Evaluate the basis for the payment to the lender and basis for the payment to the company-counterparty.

  Importance of opps, ipps, mpfs and dmepos

Research and discuss the differences and importance of : OPPS, IPPS, MPFS and DMEPOS.

  Time value of money

Time Value of Money project

Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd