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Question - XYZ Corp, a US firm, is holding a music festival in Mexico. The festival will cost MXN 94M to be set up today, half of which will be paid by their Mexican subsidiary, and half of which will be paid by the XYZ parent company. One year from today, the music festival will produce cash flows of MXN 200M, half of which will go to XYZ, and half of which will be kept by the local subsidiary. The spot rate today is MXN 19.5 per USD, and the 1 year forward rate is MXN 17.7 per USD. XYZ's USD cost of capital for foreign projects is 17.4%, and the local subsidiary's peso cost of capital is 10.2%. You may ignore taxes for the purpose of this question. What is the NPV of this project to the US parent firm? Please give your answer to the nearest dollar.
Rusty Hardware makes only cash sales. It began 2016 with a credit balance of $32,000 in the refund liability account. Sales during 2016 were $600,000. Rusty estimates that 6% of all sales will be returned. During 2016, customers returned merchandise ..
Hip Duds Company is considering the purchase of new machines on January 1, 2015. Trail Power has been using the same machines to make its name brand clothing for the last five years. A cost efficiency consultant has suggested that production costs ma..
In the progressive tax-rate system, risk-neutral investors prefer volatile assts over riskless assets because they can average their tax rates. Ture or false? Discuss.
On May 2, Sunland Company lends $90,400 to Chang, Inc., issuing a 6-month, 12% note. Prepare the entry to record the issuance of the note.
Big Ben Corporation has 250,000 shares of $50 par common stock outstanding. On May 10, Big Ben Corporation declared a 2% stock dividend to be issued August 1 to stockholders of record on June 9. The market price of the stock was $60 per share on M..
Should the firm make the part or purchase from outside? The expense of capital is 10% and PV factor for every one of the 4 years is 0.909, 0.826, 0.751 and 0.68
Hunt Inc. had total assets and total liabilities, What was the net income for the period if there were no other changes affecting Stockholders Equity?
10th Generation Electronics had two transformers in its inventory, one purchased in February for $11,800 and the other acquired in September for $13,300. In December, they sold one of the transformers to Ram Enterprises for $16,400 and reported a gro..
You are a risk consultant to a financial institution. List and discuss at least four actions you recommend the client to take to avoid risk management mistakes.
questioniguana inc. manufactures bamboo picture frames that sell for 25 each. every frame needs 4 linear feet of bamboo
Suppose Stephenson decides to issue equity to finance the purchase. What is the net present value of the project
What is the future value of 7% five feel ordinary annuity that pays $300 each year if this were an annuity due, what would its future value be
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