Forward rates to estimate dollar cash flows

Assignment Help Financial Management
Reference no: EM132039097

Should MNCs Use Forward Rates to Estimate Dollar Cash Flows of Foreign Projects?

POINT: Yes. An MNC’s parent should use the forward rate for each year in which it will receive net cash flows in a foreign currency. The forward rate is market-determined and serves as a useful forecast for future years.

COUNTER-POINT: No. An MNC should use its own forecasts for each year in which it will receive net cash flows in a foreign currency. If the forward rates for future time periods are higher than the MNC’s expected spot rates, the MNC may accept a project that it should not accept.

WHO IS CORRECT? Use the Internet to learn more about this issue. Which argument do you support? Offer your own opinion on this issue.

Reference no: EM132039097

Questions Cloud

What is the company net income : What is the company's net income? What is the company's ROE?
Abreast of events affecting country risk : Assume you are the economist for a MNC and your job is to keep the CFO and CEO abreast of events affecting country risk.
Purchase of new pleasure boat for tourist business : What is the payback period on Popeye's purchase of a new pleasure boat for his tourist business?
Shareholders are satisfied with the company management : The company has shown a profit every year for the past 18 years, and the shareholders are satisfied with the company’s management
Forward rates to estimate dollar cash flows : Should MNCs Use Forward Rates to Estimate Dollar Cash Flows of Foreign Projects?
What is the project npv : The project’s cost of capital is 15%. What is the project’s NPV?
What is the value of the project with leverage : ABC Meat Processing, Inc. is considering an upgrade to their facilities. What is the NPV of this project? What is the value of the project with leverage?
Quickly recall that this is irr for project : A colleague asks for your help in finding the discount rate where the NPV=0 for a set of cash flows. You quickly recall that this is the IRR for a project.
What best describes operating profit margin : What best describes operating profit margin?

Reviews

Write a Review

Financial Management Questions & Answers

  Foreign company acquisition

Acquisition by a foreign company and the effects of that decision and the results of foreign exchange in Euro and the exchange rate differences.

  Financial management for profit and non profit organizations

In this essay, we are going to discuss the issues of financial management in a non-profit organisation.

  Method for estimating a venture''s value

Evaluate venture's present value, cash and surplus cash and basic venture capital.

  Replacement analysis

This document show the Replacement Analysis of modling machine. Is replacement give profit to company or not?

  Business finance task - capital budgeting

Your company is considering using the payback period for capital-budgeting. Discuss the advantages and disadvantages of this technique.

  Analysis of the investment

In this project, you will focus on one of these: the additional cost resulting from the purchase of an apple press (a piece of equipment required to manufacture apple juice).

  Conduct a what-if analysis

Review the readings and media for this unit, including the Anthony's Orchard case study media. Familiarise yourself with the Anthony's Orchard company and its current situation.

  Determine operational expenditures

Organisations' behaviour is guided by financial data. In the short term, such data will help determine operational expenditures; in the long term, historical data may help generate forecasts aimed at determining strategic plans. In both instances.

  Personal financial management

How much will you have left over each half year if you adopt the latter course of action?

  Sources of finance for expansion into new foreign markets

A quoted company is considering several long-term sources of finance for expansion into new foreign markets.

  Long term financial planning

This assignment is designed for analyze Long term financial planning begins with the sales forecast and the key input in the long term fincial planning.

  Explain the role of fincial manager

This assignment explain the role of fincial manager, function of manger. And what are the motives of financial manager.

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