PHL company is a U.S. sales company are somewhat affected by the value of the New Zealand
Question:
PHL company is a U.S. sales company are somewhat affected by the value of the New Zealand dollar (NZ$), because it faces competition from New Zealand exporters. Below are the details of transactions for the PL company throughout the year:
(i) PHL has forecasted sales in the New Zealand dollar revenue invoiced in New Zealand dollars are expected to be NZ$700.
(ii) Its cost of materials is estimated is $200 million from purchase of U.S. materials and NZ$100 million from the purchase of New Zealand materials.
(iii) Fixed cost is estimated at $50 million.
(iv) Variable operating expenses are estimated at 10 percent of total sales after include New Zealand sales which translated to a dollar amount.
Three scenarios and the expected value for the upcoming scenarios are as follows:
Forecast the net cash flow for PHL Company under each three scenarios.
Financial Markets And Institutions
ISBN: 978-0132136839
7th Edition
Authors: Frederic S. Mishkin, Stanley G. Eakins