Assignment
Problem 1
Discuss the general functions involved in international cash management. Explain how the MNC's optimization of cash flow can distort the profits of each subsidiary.
Problem 2
Explain the benefits of netting. How can a centralized cash management system be beneficial to the MNC?
Problem 3
How can an MNC implement leading and lagging techniques to help subsidiaries in need of funds?
Problem 4
Why would a U.S. firm consider investing short term funds in euros even when it does not have any future cash outflows in euros?
Problem 5
Fort Collins, Inc. has $1 million in cash available for 30 days. It can earn 1% on a 30 day investment in the U.S. Alternatively, if it converts the dollars to Mexican pesos, it can earn 1 1/2% on a Mexican deposit. The spot rate of the Mexican peso is $.12. The spot rate 30 days from now is expected to be $.10. Should Ft. Collins invest its cash in the U.S. or in Mexico? Substantiate your answer.