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strayer university finc535 Week 7 Homework




Question;Week 7 Homework;International Finance FIN: 535;Strayer University;2013;15. DFI;Strategy;A. What;comparative advantage does JCPenney have when establishing a store in a foreign;country, relative;to an independent variety store?;B. Why might;the overall risk of JCPenney decrease or increase as a result of its recent;global;expansion?;C. JCPenney has;been more cautious about entering China. Explain the potential obstacles;associated with;entering China.;16. FDI Location Decision.;A. Assume that;the Japanese yen strengthens against the US dollar over time. How would this be;expected to;affect the profits earned by the Chinese subsidiary?;B. If Decko Co.;ltd had established its subsidiary in Tokyo, Japan instead of China, would its;subsidiary?s;profits be more exposed or less exposed to exchange rate risk?;C. Why do you;think that Decko Co. ltd established the subsidiary in China instead of Japan?;Assume no major;country risk barriers.;D. If the;Chinese subsidiary needs to borrow money to finance its expansion and wants to;reduce;its exchange;rate risk, should it borrow US dollars, Chinese Yuan, or Japanese yen?;17. Foreign Investment;Decision;If the yen is;expected to appreciate against the dollar, while the rupee is expected to;depreciate;against the;dollar, how would this affect Trak?s direct foreign investment?.;24. Break-even Salvage;Value.A project in Malaysia;costs $4,000,000. Over the next three years, the;project will generate total operating;cash flows of $3,500,000, measured in today?s dollars using a;required rate of return of 14 percent.;What is the break-even salvage value of this project?;28. Capital;Budgeting with Hedging;What is the;dollar amount of cash flows that Baxter will receive in 5 years if it accepts;this;project?;29. Capital;Budgeting and Financing;A. Determine the NPV under these conditions.;B. Rather than use all;cash, Cantoon could partially finance the acquisition. It could obtain a;loan of 3 million Euros today that would be used to cover a portion;of the acquisition. In this;case, it would have to pay back a lump sum total of 7 million Euros;at the end of 8 years to repay;the loan. There are no interest payments on this debt. The way in;which this financing deal is;structured, none of the payment is tax-deductible. Determine the;NPV if Cantoon uses the;forward rate instead of the spot rate to forecast the future spot;rate of the euro, and elects to;partially finance the acquisition.


Paper#49386 | Written in 18-Jul-2015

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