Question: The Managing Foreign Exchange Risk case study (Rebelo, 2013) identifies two issues that Wireworld, an American company, faces as it considers whether or not to

TheManaging Foreign Exchange Riskcase study (Rebelo, 2013) identifies two issues that Wireworld, an American company, faces as it considers whether or not to acquire an Indonesia communications company, Nusantara Communications Inc. (NCI). The first issue is the uncertainties regarding the cost in US dollars of acquiring the company due to Indonesia's requirements for paying in rupiah. The second issue concerns restrictions on repatriation of profits, which would force Wireworld to invest its expected profits in Indonesia for at least six years or more. Acquiring NCI is complicated further by the possibility that NCI could be taken over or confiscated by the Indonesian government.

Identify at least one of the significant risks and effects on ROI from each of the requirements set by or potential actions of the Indonesian government?
Recommend at least one way in which each of the risks or effects you have identified can be mitigated.
Explain whether you would advise Wireworld to purchase NCI. Defend your answer with evidence from the case and other resources.

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