Thursday 7 January 2016

Consider a firm with a healthy cash flow but very low profits because for example of high depreciation allowances Your boss argues that such a firm should probably.doc


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International Financial Management



1.       What is all that you would like to tell the top management so as to establish your credibility?
2.      What will you do next? How will you present your analysis?
3.      Should your company make this investment? If yes, then which will be the best route to (a) maximization of profits, (b) minimizing risk, (c) finding the optional mix of profits and risk.
What all information to you need to arrive at these answers? How will you structure your analysis?
4.    How will you proceed to structure this situation? What all information will be needed? What is your perception of the risks involved in the proposed structure?
5.      How will you guide your CEO in this situation?
6.      What are the choices available with you to meet these cash flow requirements? Analyze each possibility in detail and argue for and against each of them.
7.      What will you do? How you will protect your interest in this situation?
8.     1.         A young financial analyst in Canadian firm has been assigned the task of evaluating a direct investment project in Mexico. She has worked out the operating cash flows of the project for the next 7 years For finding the NPV of the project she proposes the following four alternatives:
(a)       Discount the nominal MEP (Mexican Peso) cash flows using the Mexican nominal interest rate used for similar projects and translate into CAD using the current MEP/CAD spot rate.
(b)       Discount the real i.e. inflation adjusted MEP cash flows using the Mexican real interest rate and translate at the current spot rate.
(c)       Forecast the MEP/CAD exchange rate for the next 7 years using PPP; translate nominal MEP cashflows into nominal CAD cash flows; discount using nominal CAD interest rate used for similar projects.
(d) Adjust the nominal CAD cash flows for Canadian inflation and discount using real Canadian interest rate.
Her boss says that if relative PPP and covered interest parity hold, the above alternatives would yield identical answers. Is he right? If not, can you correct him? Justify your answers with appropriate and sufficiently detailed arguments.

2.         Consider a firm with a healthy cash flow but very low profits—because, for example, of high depreciation allowances. Your boss argues that such a firm should probably borrow in a strong (low-interest) currency, because the high-tax shield from weak-currency loans is more likely to be lost than the low tax shield from strong-currency loans. Is this analysis accurate?


WE PROVIDE CASE STUDY ANSWERS, ASSIGNMENT SOLUTIONS, PROJECT REPORTS AND THESIS


ARAVIND - 09901366442 – 09902787224








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