4. (a) Blackpool Co. exports 90 percent of its total production of goods in New Mexico...
Fantastic news! We've Found the answer you've been seeking!
Question:
Transcribed Image Text:
4. (a) Blackpool Co. exports 90 percent of its total production of goods in New Mexico to Latin American countries. Kakamega Co. sells all the products it produces in the United States, but it has a subsidiary in Spain that usually generates about 30 percent of its total earnings. Required: Compare the translation exposure of these two U.S. companies (6 points). (b) Assume that you live in the United States and invest $60,000 to establish a language school called Escuela de Ingles in Mexico City, Mexico. You set up a small subsidiary in Mexico with an office and an attached classroom that you lease. You hire local individuals in Mexico who can speak English and teach it to others. Your school offers two types of courses: a one-month structured course in English and a one-week intensive course for individuals who already know English but want to improve their skills before visiting the United States. You advertise both types of teaching services in local newspapers. Assume all revenue and expenses associated with your business are denominated in Mexican pesos. Your subsidiary sends most of the profits from the business in Mexico to you at the end of each month. Although your expenses are stable, your revenue varies with the number of clients who sign up for the courses in Mexico. Required: Answer each of the following questions as if you were serving on the board or as a manager of the business: (i) Explain how your business is subject to translation exposure (10 points). Accessibility: Unavailable 4. (a) Blackpool Co. exports 90 percent of its total production of goods in New Mexico to Latin American countries. Kakamega Co. sells all the products it produces in the United States, but it has a subsidiary in Spain that usually generates about 30 percent of its total earnings. Required: Compare the translation exposure of these two U.S. companies (6 points). (b) Assume that you live in the United States and invest $60,000 to establish a language school called Escuela de Ingles in Mexico City, Mexico. You set up a small subsidiary in Mexico with an office and an attached classroom that you lease. You hire local individuals in Mexico who can speak English and teach it to others. Your school offers two types of courses: a one-month structured course in English and a one-week intensive course for individuals who already know English but want to improve their skills before visiting the United States. You advertise both types of teaching services in local newspapers. Assume all revenue and expenses associated with your business are denominated in Mexican pesos. Your subsidiary sends most of the profits from the business in Mexico to you at the end of each month. Although your expenses are stable, your revenue varies with the number of clients who sign up for the courses in Mexico. Required: Answer each of the following questions as if you were serving on the board or as a manager of the business: (i) Explain how your business is subject to translation exposure (10 points). Accessibility: Unavailable
Expert Answer:
Related Book For
Posted Date:
Students also viewed these finance questions
-
In the IS-LM model, a decrease in the interest rate would be the result of a(n): A) increase in money demand. B) decrease in taxes. C) increase in the money supply. increase in government purchases....
-
One of the best methods of learning broad concepts in this text is to put yourself in the place of an MNC manager or board member and apply the concepts to make financial decisions. Board members do...
-
As you might imagine, the chart of accounts for a manufacturing firm would be different from that of a service firm. Not surprisingly, service firms differ so much that software now exists for almost...
-
Consider the diagram below, which is drawn under the assumption that the new Keynesian sticky-price theory of aggregate supply applies. Assume that at present, the economy is in long-run equilibrium...
-
For random variable X and Y in Example 5.26, use MATLAB to generate a list of the form That includes all possible pairs (x,y). Y1 Px,Y (1,Y1) Px,Y (2, Y2) X2 y2
-
Find the = 0.01 critical value for the chi-square statistic with 5 degrees of freedom.
-
Carolinas Golf School, Inc., completed the following transactions during October, 2012: Oct 1 Prepaid insurance for October through December, $900. 4 Performed services (gave golf lessons) on...
-
3 3 points During the current year, Rayon Corporation disposed of two different assets. On January 1, prior to their disposal, the accounts reflected the following Accumulated Asset Machine A Machine...
-
As the Covid-19 crisis spreads to new epicenters in Europe and the US, companies are struggling to mobilize responses. There are no easy answers, due to the unpredictability of disease dynamics, a...
-
What is a general journal (in a manual accounting system)? List the advantages of initially recording a business' transactions in a general journal.
-
What are the debit and credit rules? How do these rules relate to the accounting equation?
-
What are closing entries? Describe how (a) revenue accounts, (b) expense accounts and (c) the withdrawals account are closed.
-
How does the lower portion of the income statement for a company differ from that of a sole proprietorship? Where does a company report its income taxes payable on its financial statements?
-
How is the accounting equation used to set up a basic accounting system for a business?
-
Mcdale Inc. produces and sells two products. Data concerning those products for the most recent month appear below: Product I49V Product Z50U Sales $ 52,000 $ 57,000 Variable expenses $ 14,000 $...
-
The Home Depot is the leading retailer in the home improvement industry and one of the 10largest retailers in the United States. The company included the following on its January 29, 2012, balance...
-
Working in pairs, find the longest-running alliance relationship your research can find. Present its secrets for such longevity.
-
Corporate bankruptcies* climbed new heights during the Great Recession of 20082009. Firms ranging from mighty ones such as Lehman Brothers and General Motors to tiny entrepreneurial outfits dropped...
-
Undertaking FDI, by definition, means not investing in the MNE's home country. What are the ethical dilemmas here? What are your recommendations, as (1) MNE executives, (2) Labor union leaders of...
-
For the idealized class-B output stage in Figure 8.18 in the text, show that the maximum theoretical conversion efficiency for a symmetrical squarewave input signal is 100 percent. <00 B V+ A Figure...
-
Consider an idealized class-B output stage shown in Figure P8.22. The output stage is to deliver \(50 \mathrm{~W}\) of average power to a \(24 \Omega\) load for a symmetrical input sine wave. Assume...
-
Consider an idealized class-B output stage shown in Figure P8.22. (The effective turn-on voltages of devices A and B are zero, and the effective "saturation" voltages of \(v_{A}\) and \(v_{B}\) are...
Study smarter with the SolutionInn App