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Fin 335 International finance

1. The exchange rate is 1.22 Swiss francs per U.S. dollar. How many U.S. dollars are needed to purchase 1,500 Swiss francs? [$1,229.51]

2. You are planning an extended trip to Hong Kong. You have located some housing that you can lease for 9,400 Hong Kong dollars per month. What is the cost per month in U.S. dollars if the exchange rate is HK$1 = $.1279? [$1,202.26]

3. Your German friend has decided to come and visit you in the U.S. You estimate the cost of her trip at $4,800. What is the cost to her in Euros if the U.S. dollar equivalent of the euro 1.58? [€3,037.98]

 4. Currently, you can purchase either 106 Canadian dollars or 123 Japanese yen for $100. What is the C$/¥ cross rate?  [C$/¥ 0.8618]

5. Breakeven Point Analysis: TeeOff Corp produces golf umbrellas for several sports retail outlets. Their fixed costs are $600,000. The sell the umbrellas for $9.25 (MSRP). The variable costs per umbrella (labor and material) is $4.25. How many umbrellas must they sell to breakeven? (120,000)

QBEP = Fixed Costs / (P - VC)

 6. Clemson Software is considering a new project whose data are shown below.  The required equipment has a 3-year tax life, after which it will be worthless, and it will be depreciated by the straight-line method over 3 years.  Revenues and other operating costs are expected to be constant over the project's 3-year life.  What is the project's Year 1 cash flow? ($30,333)

 

Equipment cost (depreciable basis)                                        $65,000

Straight-line depreciation rate                                              33.333%

Sales revenues, each year                                                       $60,000

Operating costs (excl. depreciation)                                      $25,000

Tax rate                                                                                     35.0%

 

7. As assistant to the CFO of Boulder Inc., you must estimate the Year 1 cash flow for a project with the following data.  What is the Year 1 cash flow? ($5,950)

 

Sales revenues                                                            $13,000

Depreciation                                                                 $4,000

Other operating costs                                                   $6,000

Tax rate                                                                         35.0%

 

8. Your company, CSUS Inc., is considering a new project whose data are shown below.  The required equipment has a 3-year tax life, and the accelerated rates for such property are 33%, 45%, 15%, and 7% for Years 1 through 4.  Revenues and other operating costs are expected to be constant over the project's 10-year expected operating life.  What is the project's Year 4 cash flow? ($13,090)

 

Equipment cost (depreciable basis)                                        $70,000

Sales revenues, each year                                                       $42,500

Operating costs (excl. depreciation)                                      $25,000

Tax rate                                                                                     35.0%

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