QUESTION $32(12$ marks$)$

Messan Corp., a manufacturer of clothing, wants to increase its market share by acquiring a target producing a popular clothing line in Europe. This clothing line is well established. Forecasts indicate a relatively stable euro over the life of the project. Kompton Ltd$.$ wants to increase its market share in the personal computer market by acquiring a target in Japan that currently produces radios and converting the operations. Forecasts indicate a depreciation of the yen over the life of the project. Both companies are based in the U$.$S$.$ and funds resulting from the projects, will be converted to US dollars and remitted to the respective U$.$S$.$ parent on a regular basis.

i$)$ Which target do you think will result in a higher net present value?

$(2$ marks$)$

ii$)$ Give two reasons for your answer to part i$)$ above.

$(5$ marks$)$

iii$)$ Identify two strategies the U$.$S$.$ parent may use to best reduce the exposure to a host government takeover.

$(5$ marks$)$