How would you advise the company to handle the repatriation?

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Navigation Systems Inc. now has total worldwide revenues of over $500 million forecast for this coming year. You have operations in the United States of $300 million with a 10% ROS (return on sales, which is the same as net income on an income statement); operations in Germany of €100 million with anROSof 12%; and operations in Shanghai, China of 650 million Yuan with an ROS of 8%. You expect to repatriate all the ROS to the United States when available in 12 months.

At your supervisor's request, do the following:

Determine the spot and 12-month forward exchange rates, and determine any change in the ROS repatriated in 12 months based on exchange rates versus the current forecast.

Describe the repatriation using each of the following:

a spot transaction

an outright forward

a foreign-exchange swap

Would there be any use or benefit in using a currency option or currency swaption? Describe each.
Be sure to consider any U.S. corporate taxes that may be due and also whether there are any tax holidays in effect that may alter the

taxes due on repatriation of the profits.

How would you advise the company to handle the repatriation?

Reference no: EM13896221

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