Question: Using the following information to answer the question. Below is the revenue and cost estimates for DeKalb, Inc. All numbers are in millions (U.S.

Using the following information to answer the question. Below is the revenue and cost estimates for DeKalb, Inc. All numbers are in millions (U.S. dollar or New Zealand dollar). U.S. Business New Zealand Business Sales $800 NZ$800 Cost of materials $500 NZ$100 Operating expense $300 Interest expense $100 Cash flow $100 NZ$700 There are three possible scenarios for the New Zealand dollar (NZ$) exchange rate: (1) NZ$ = $0.50, (2) NZ$ = $0.55, and (3) NZ$ = $0.60. All New Zealand dollar earnings will be remitted back to the U.S. parent at the end of the period. Answer the following questions: 1. What is the revenue in U.S. dollar in each of the scenario? 2. What is the total cost (sum of all three costs) in U.S. dollar in each of the scenario? 3. Assume the exchange rate today is NZ$ = $0.60. Should the firm consider hedging its NZ$ exposure? If so, suggest the action should be taken using futures as hedging tool.

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