The subsidiary in Australia generates a significant amount of profit, which can be utilized to fund...
Fantastic news! We've Found the answer you've been seeking!
Question:
Transcribed Image Text:
The subsidiary in Australia generates a significant amount of profit, which can be utilized to fund the import of manufacturing equipment from South Korea for the electronic component plant in Singapore. The CEO has initiated negotiations with the South Korean equipment supplier, who is willing to offer XYZ a payment period of 3 years. However, the payments must be made through quarterly installments of 62,000,000 WON by the Australia subsidiary. To facilitate this arrangement, the CEO has requested the construction of a currency swap that enables the utilization of the Australia subsidiary's profits to cover the equipment costs. To proceed with the three-year currency swap, you will apply the swap bank quotes. Additionally, a graphical representation of the swap will be provided to help the CEO visualize how the swap arrangement will function. Relevant information required for these calculations and the graphical representation is provided below: Exchange rates: Spot SGD/JPY SGD/Won SGD/CAD SGD/GBP SGD/AUD SGD/ZAR Bid 0.0094 0.0006 0.7614 1.3034 0.7225 0.0606 Ask 0.0095 0.0008 0.7616 1.3038 0.7226 0.0607 Current borrowing interest rates on loans: Singapore Japan South Korea Canada UK Australia South Africa Fixed 0.640% 0.525% 1.164% 0.666% 0.577% 0.612% 5.045% Libor 0.130% 0.015% 0.654% 0.156% 0.067% 0.102% 4.535% BANK CURRENCY SWAP INTEREST RATE QUOTES AGAINST U.S. LIBOR RATE SGD Yen Won CAD$ Years AUS Ask% Bid% Ask% Bid% Ask% Bid% 0.676 0.567 0.587 0.602 0.622 5.035 5.055 0.686 0.577 0.597 0.612 0.632 5.045 5.065 0.696 0.587 0.607 0.622 0.642 5.055 5.075 0.706 0.597 0.617 0.632 0.652 5.065 5.085 0.716 0.607 0.627 0.642 0.662 5.075 5.095 0.726 0.617 0.637 0.652 0.672 5.085 5.105 0.736 0.627 0.647 0.662 0.682 5.095 5.115 0.746 0.637 0.657 0.672 0.692 5.105 5.125 0.756 0.647 0.667 0.682 0.702 5.115 5.135 0.692 0.712 5.125 5.145 GBP Bid% 1 0.630 2 0.640 0.660 0.525 0.545 3 0.650 0.670 0.535 0.555 0.660 0.680 0.545 0.565 0.670 0.690 0.555 0.575 0.680 0.700 0.565 0.585 4 5 Ask% Bid% Ask% Bid% Ask% Bid% Ask% 0.650 0.515 0.535 1.154 1.174 0.656 1.164 1.184 0.666 1.174 1.194 0.676 1.184 1.204 0.686 1.194 1.214 0.696 1.204 1.224 0.706 1.214 1.234 0.716 8 0.700 0.720 1.224 1.244 0.726 9 0.710 0.730 0.595 0.615 1.234 1.254 0.736 0.720 0.740 0.605 0.625 1.244 1.264 0.746 0.766 0.657 0.677 6 7 0.690 0.710 0.575 0.595 0.585 0.605 10 Other summarised information: Australia subsidiary profits generated quarterly: Import cost of equipment/machinery for the manufacturing of electronic components in Singapore: ZAR AUD500,000 WON74,000,000 The subsidiary in Australia generates a significant amount of profit, which can be utilized to fund the import of manufacturing equipment from South Korea for the electronic component plant in Singapore. The CEO has initiated negotiations with the South Korean equipment supplier, who is willing to offer XYZ a payment period of 3 years. However, the payments must be made through quarterly installments of 62,000,000 WON by the Australia subsidiary. To facilitate this arrangement, the CEO has requested the construction of a currency swap that enables the utilization of the Australia subsidiary's profits to cover the equipment costs. To proceed with the three-year currency swap, you will apply the swap bank quotes. Additionally, a graphical representation of the swap will be provided to help the CEO visualize how the swap arrangement will function. Relevant information required for these calculations and the graphical representation is provided below: Exchange rates: Spot SGD/JPY SGD/Won SGD/CAD SGD/GBP SGD/AUD SGD/ZAR Bid 0.0094 0.0006 0.7614 1.3034 0.7225 0.0606 Ask 0.0095 0.0008 0.7616 1.3038 0.7226 0.0607 Current borrowing interest rates on loans: Singapore Japan South Korea Canada UK Australia South Africa Fixed 0.640% 0.525% 1.164% 0.666% 0.577% 0.612% 5.045% Libor 0.130% 0.015% 0.654% 0.156% 0.067% 0.102% 4.535% BANK CURRENCY SWAP INTEREST RATE QUOTES AGAINST U.S. LIBOR RATE SGD Yen Won CAD$ Years AUS Ask% Bid% Ask% Bid% Ask% Bid% 0.676 0.567 0.587 0.602 0.622 5.035 5.055 0.686 0.577 0.597 0.612 0.632 5.045 5.065 0.696 0.587 0.607 0.622 0.642 5.055 5.075 0.706 0.597 0.617 0.632 0.652 5.065 5.085 0.716 0.607 0.627 0.642 0.662 5.075 5.095 0.726 0.617 0.637 0.652 0.672 5.085 5.105 0.736 0.627 0.647 0.662 0.682 5.095 5.115 0.746 0.637 0.657 0.672 0.692 5.105 5.125 0.756 0.647 0.667 0.682 0.702 5.115 5.135 0.692 0.712 5.125 5.145 GBP Bid% 1 0.630 2 0.640 0.660 0.525 0.545 3 0.650 0.670 0.535 0.555 0.660 0.680 0.545 0.565 0.670 0.690 0.555 0.575 0.680 0.700 0.565 0.585 4 5 Ask% Bid% Ask% Bid% Ask% Bid% Ask% 0.650 0.515 0.535 1.154 1.174 0.656 1.164 1.184 0.666 1.174 1.194 0.676 1.184 1.204 0.686 1.194 1.214 0.696 1.204 1.224 0.706 1.214 1.234 0.716 8 0.700 0.720 1.224 1.244 0.726 9 0.710 0.730 0.595 0.615 1.234 1.254 0.736 0.720 0.740 0.605 0.625 1.244 1.264 0.746 0.766 0.657 0.677 6 7 0.690 0.710 0.575 0.595 0.585 0.605 10 Other summarised information: Australia subsidiary profits generated quarterly: Import cost of equipment/machinery for the manufacturing of electronic components in Singapore: ZAR AUD500,000 WON74,000,000
Expert Answer:
Answer rating: 100% (QA)
Certainly Heres a stepbystep explanation of the process 1 Convert WON to SGD We start by convert... View the full answer
Related Book For
Financial Reporting Financial Statement Analysis and Valuation a strategic perspective
ISBN: 978-1337614689
9th edition
Authors: James M. Wahlen, Stephen P. Baginski, Mark Bradshaw
Posted Date:
Students also viewed these finance questions
-
Explain the meaning of the terms emoluments, employments and office for the purposes of PAYE as you earn systems. 2. Explain the actual receipts basis of assessing the emoluments from the employment...
-
You are working on your firms fifth audit of SSC. The previous audits have all resulted in standard unqualified audit reports. Read the following write-up from your audit files concerning SSC and its...
-
Let (x) = x 2 + 3x + 2 and g(x) = x + 1. Find each of the following. (a) (fg)(x) (b) (fg) (-2) (c) (+)(x) (d) ()(-2)
-
Given the following functions F(s), find f(t) F(s) = s + 10/(s + 4) + (s + 6) F(s) = 24/(s + 2) + (s + 8)
-
This diagram shows an electron tube. Electrons emitted from the cathode accelerate towards the anode and then pass into a uniform electric field created by two oppositely charged horizontal metal...
-
The adjusted trial balance of Brompton Bowling Alley at 30 June 2026, the end of the entitys accounting year, follows. Additional data taken into account in the preparation of the above adjusted...
-
On December 31, 2011, the end of the fiscal year, California Microtech Corporation completed the sale of its semiconductor business for $10 million. The business segment qualifies as a component of...
-
MOTOROLA, INC., AND SUBSIDIARIES* CONSOLIDATED STATEMENTS OF OPERATIONS (IN PART) Years Ended December 31, (In millions, except per share amounts) 2008 2007 2006 Other Charges 3. Other Financial Data...
-
Read the case study her vision of a model research center. You are to write an essay narrative that must include the following questions. What is it about Rachels leadership that clearly suggests...
-
Acting as an accounting advisor to the firm, prepare a memo in which you analyze the financial statements prepared in step two and three and along with the ratios that have been calculated above and...
-
i. 11. iii. iv. V Differentiate between Carburising and Nitriding on the basis of: Element diffused on surface, required/01/ the recommended temperature at which the treatment is required to be...
-
Select all that apply When only the intrinsic value of an option is designated as the hedging instrument, the option's time value may be recognized in net income Multiple select question. on a...
-
A heat-treating furnace is 20 m long, 10 m wide and 6 m high. If a check with thermocouples indicates that the average wall temperature is 400 C and the top is at 600 C, calculate the heat loss from...
-
The decline of manufacturing has dominated the political narrative in the United States, but thereare dual plotlines within this well-known story. A few outlier industries (notably...
-
Create your initial post on the DQ 1 1 Discussion Board in response to the following questions: What record label did Sylvia Robinson start and what were some of her achievements and contributions to...
-
2 (5 Marks) A student borrowed an educational loan of $100,000 at an interest rate of 10% per year and repaired equal payment of S1000 at the end of cach year starting from year 2 to year S The...
-
Michelles trust is subject to 3.8% surtax on the lesser of the trusts net investment income or the excess of the trusts adjusted gross income over the $12,400 threshold (the highest trust tax rate)....
-
Caterpillar manufactures heavy machinery and equipment and provides financing for purchases by its customers. Caterpillar reported sales and interest revenues of $51,324 million for 2008. The balance...
-
Exhibits 1.26-1.28 of Integrative Case 1.1 present the financial statements for Walmart for 2012-2015. In addition, the website for this text contains Walmart's December 31, 2015, Form 10-K. You...
-
Dell produces computers and related equipment on a made-to-order basis for consumers and businesses. Sun Microsystems designs and manufactures higher-end computers that function as servers and for...
-
Identify collinearity and explain its consequences for least squares estimation.
-
Explain the issues that need to be considered when choosing a regression model.
-
Use the Akaike information or Schwartz criteria to select variables for a predictive model.
Study smarter with the SolutionInn App