Complete the albion mini case

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PROBSET 8 A+B+C  Complete the Albion Mini Case below: on Hints: For part a, compute the ANNUAL CFs when the ex-rate is $1.50/BP, following Exhibit 9.9. Everything will be the same (Q, P, FC, DEP) as in Case 3, Exhibit 9.9, EXCEPT for the Variable Cost. The variable cost per unit will be different at the new ex-rate = $1.50/£. The locally sourced inputs will be £356.40 reflecting the 8% increase due to inflation, and you only need to calculate the new price of the imported input to then find the new combined unit variable cost. Then you can follow Exhibit 9.10. Assume that the annual CFs from part a in the Mini Case will continue for 4 years, and compare to the benchmark case. Show how you calculate the four-year Present Value. ESSAY: For part c, outline three different and specific strategies for Albion’s exposure to a depreciation of the BP (financial hedging counts as one strategy, be specific about how Albion would use financial hedging), and explain each strategy specifically for Albion in a separate, complete essay (three essays total) Please write specifically about Albion’s situation assembling computers in the UK using imported parts (microprocessors) from the US, invoiced in dollars, and not about operational hedging strategies for companies in general.

Reference no: EM132009553

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