The Latimore Company invested $8.5 million in a new plant in Italy when the exchange rate was 1.1500 euros to the dollar. At the end of the year, the rate was 1.2000 euros to the dollar. (Indirect quotes.)
a. Latimore's money has gained in value due to the exchange rate movement by (1.2-1.15)*8.5 mln.= $ 0.425 mlns. |
b.Translation exchange gain whereby the invetsment of Latimore Company has gained in value due to exchange rate fluctuations of the Euro currency. |
c. As this excahnge rate fluctuation is capital in nature, they are not taxable, until realised in home currency,ie. $. |
The Latimore Company invested $8.5 million in a new plant in Italy when the exchange rate...
Questions 3. Exchange Rate Effects on Investing. Explain how the appreciation of the Australian dollar against the U.S. dollar would affect the return to a U.S. firm that invested in an Australian money market security 4. Exchange Rate Effects on Borrowing. Explain how the appreciation of the Japanese yen against the U.S. dollar would affect the return to a U.S. firm that borrowed Japanese yen and used the proceeds for a U.S. project. 6. Bid/ask Spread. Utah Bank's s bid...
1. Exchange Rate: Suppose the direct foreign exchange rates in U.S. dollars are: 1 British pound = $1.60 1 Canadian dollar = $0.74 Required: a. What are the indirect exchange rates for the British pound and the Canadian dollar? b. How many pound must a British company pay to buy goods costing $8,000 from the U.S. company? c. How many U.S. dollars must be paid for a purchase costing 4,000 Canadian dollars? 2. Changes in Exchange Rates: Upon arrival at...
15 Suppose that the current exchange rate is €1.00 - $1.60. The indirect quote from the US. perspective is A) €0.6250 - $1.00 3) €1.50 - $1.00 €1.00 - $1.60 Dy none of the options 19) The bid price A) is the price that a dealer stands ready to pay B) is the price that a dealer stands ready to sell at. is the price that the dealer has just paid for something, his historical cost of the most recent...
Question 2 25 pts Alcan invested $77 million in a new packaging facility in North Carolina. If the plant is to be depreciated over 10 years with straight line depreciation, sales are to generate $40 million in revenues per year, operating and maintenance costs are $22 million per year, and there is no salvage value, what is the after-tax cash flow (in millions of $) from the year 12 of production for the facility? Assume an effective tax rate of...
1. (30%) ABC company can invest $10 million in a new plant for producing bread jam. The plant has an expected life of 5 years, and expected sales are 6 million jars of jam a year. Fixed costs are $2 million a year, and variable costs are $1 per jar. The product will be priced at $2 per jar. The plant will be depreciated straight-line over 5 years to a salvage value of zero. The opportunity cost of capital is...
On December 18, 2017, Stephanie Corporation acquired 100 percent
of a Swiss company for 4.0 million Swiss francs (CHF), which is
indicative of book and fair value. At the acquisition date, the
exchange rate was $1.00 = CHF 1. On December 18, 2017, the book and
fair values of the subsidiary’s assets and liabilities were:
Cash
CHF
814,000
Inventory
1,314,000
Property, plant & equipment
4,014,000
Notes payable
(2,128,000
)
Stephanie prepares consolidated financial statements on December
31, 2017. By that...
On December 18, 2017, Stephanie Corporation acquired 100 percent of a Swiss company for 4.0 million Swiss francs (CHF), which is indicative of book and fair value. At the acquisition date, the exchange rate was $1.00 = CHF 1. On December 18, 2017, the book and fair values of the subsidiary’s assets and liabilities were: Cash CHF 805,000 Inventory 1,305,000 Property, plant & equipment 4,005,000 Notes payable (2,110,000 ) Stephanie prepares consolidated financial statements on December 31, 2017. By that...
On December 18, 2020, Stephanie Corporation acquired 100 percent of a Swiss company for 4.021 million Swiss francs (CHF), which is indicative of book and fair value. At the acquisition date, the exchange rate was $1.00 = CHF 1. On December 18, 2020, the book and fair values of the subsidiary’s assets and liabilities were as follows: Cash CHF 821,000 Inventory 1,321,000 Property, plant, and equipment 4,021,000 Notes payable (2,142,000 ) Stephanie prepares consolidated financial statements on December 31, 2020....
On December 18, 2017, Stephanie Corporation acquired 100 percent of a Swiss company for 4.0 million Swiss francs (CHF), which is Indicative of book and fair value. At the acquisition date, the exchange rate was $1.00 - CHF 1. On December 18, 2017, the book and fair values of the subsidiary's assets and liabilities were: Cash Inventory Property, plant & equipment Notes payable CHY 806,000 1,306,000 4,006,000 (2,112,000) Stephanie prepares consolidated financial statements on December 31, 2017. By that date,...
n December 18, 2017, Stephanie Corporation acquired 100 percent of a Swiss company for 4.0 million Swiss francs (CHF), which is indicative of book and fair value. At the acquisition date, the exchange rate was $1.00 = CHF 1. On December 18, 2017, the book and fair values of the subsidiary’s assets and liabilities were: Cash CHF 817,000 Inventory 1,317,000 Property, plant & equipment 4,017,000 Notes payable (2,134,000 ) Stephanie prepares consolidated financial statements on December 31, 2017. By that...