100% satisfaction guarantee Immediately available after payment Both online and in PDF No strings attached
logo-home
Previously searched by you
Previously searched by you
logo
FIN 565 Week 4 Homework $13.98
Add to cart
Quickly navigate to
Preview
  2.  
  3. Chamberlain College Of Nursing
  4.  
  5. Chamberlain College Of Nursing
  6.  
  7. FIN 565 (FIN565)

Other

FIN 565 Week 4 Homework
 0 purchase
  • Course
  • FIN 565 (FIN565)
  • Institution
  • Chamberlain College Of Nursing

1. Question: Sources of Supplies and Exposure to Exchange Rate Risk Laguna Co.(a U.S. firm) will be receiving 4 million British pounds in one year. It will need to make a payment of 3 million Polish zloty in one year. It has no other exchange rate risk at this time. However, it needs to buy supplie...

[Show more]

Preview 1 out of 3  pages

Document information

  • May 18, 2021
  • 3
  • 2020/2021
  • Other
  • Unknown

Subjects

  • fin 565 week 4 homework
  • fin 565 week 4
  • fin 565 homework
  • fin 565
  • fin565

Written for

  • Chamberlain College Of Nursing
  • Chamberlain College Of Nursing
  • FIN 565 (FIN565)
All documents for this subject (14)

Seller

avatar-seller
Milestonee

Reviews received

Content preview

Questions and Applications


14. Sources of Supplies and Exposure to Exchange Rate Risk Laguna Co.
(a U.S. firm) will be receiving 4 million British pounds in one year. It will
need to make a payment of 3 million Polish zloty in one year. It has no
other exchange rate risk at this time. However, it needs to buy supplies
and can purchase them from Switzerland, Hong Kong, Canada, or
Ecuador. Another alternative is that it could also purchase one-fourth of
the supplies from each of the four countries mentioned in the previous
sentence.

The supplies will be invoiced in the currency of the country from which
they are imported. Laguna Co. believes that none of the sources of the
imports would provide a clear cost advantage. As of today, the dollar
cost of these supplies would be about $6 million regardless of the source
that will provide the supplies.

The spot rates today are as follows:

1. British pound = $1.80
2. Swiss franc = $.60
3. Polish zloty = $.30
4. Hong Kong dollar = $.14
5. Canadian dollar = $.60

The movements of the pound and the Swiss franc and the Polish zloty
against the dollar are highly correlated. The Hong Kong dollar is tied to
the U.S. dollar, and you expect that it will continue to be tied to the
dollar. The movements in the value of the Canadian dollar against the
U.S. dollar are not correlated with the movements of the other
currencies. Ecuador uses the U.S. dollar as its local currency.

Which alternative should Laguna Co. select in order to minimize its
overall exchange rate risk? Transaction exposure is different from
economic exposure, whereas transaction exposure only encompasses
international transactions and economic exposure includes all changes
to cash flow. Transaction exposure is a subset of economic exposure
(Madura, J., 2020).

14. Financing to Reduce Exchange Rate Exposure Nashville Co. presently
incurs costs of about 12 million Australian dollars (A$) per year for
research and development expenses in Australia. It sells the products
that are designed each year, and all of the products sold each year are
invoiced in U.S. dollars. Nashville anticipates revenue of about $20

The benefits of buying summaries with Stuvia:

Guaranteed quality through customer reviews

Guaranteed quality through customer reviews

Stuvia customers have reviewed more than 700,000 summaries. This how you know that you are buying the best documents.

Quick and easy check-out

Quick and easy check-out

You can quickly pay through credit card or Stuvia-credit for the summaries. There is no membership needed.

Focus on what matters

Focus on what matters

Your fellow students write the study notes themselves, which is why the documents are always reliable and up-to-date. This ensures you quickly get to the core!

Frequently asked questions

What do I get when I buy this document?

You get a PDF, available immediately after your purchase. The purchased document is accessible anytime, anywhere and indefinitely through your profile.

Satisfaction guarantee: how does it work?

Our satisfaction guarantee ensures that you always find a study document that suits you well. You fill out a form, and our customer service team takes care of the rest.

Who am I buying these notes from?

Stuvia is a marketplace, so you are not buying this document from us, but from seller Milestonee. Stuvia facilitates payment to the seller.

Will I be stuck with a subscription?

No, you only buy these notes for $13.98. You're not tied to anything after your purchase.

Can Stuvia be trusted?

4.6 stars on Google & Trustpilot (+1000 reviews)

65040 documents were sold in the last 30 days

Founded in 2010, the go-to place to buy study notes for 15 years now

Start selling

Recently viewed by you

Summary ·

(0)

onderwereld notas

Exam (elaborations) ·

(2)

ACLS - Pharmacology

Other ·

(0)

kaartjes brabant deel I

Summary ·

(0)

Samenvatting Mediarecht

$13.98
  • (0)
Add to cart
Added