FINANCE Wk 10 CH 16 Assessing L-T Debt and Equity Capital Structure, 19 Internat
ID: 2794148 • Letter: F
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FINANCE Wk 10 CH 16 Assessing L-T Debt and Equity Capital Structure, 19 International Finance Question 10 fof 10) value 3.00 points A U.S. firm is expecting cash flows of 30 million Mexican pesos and 45 million Indian rupees. The current spot exchange rates are $1-11.732 pesos and $1 45.209 rupees. Assume these cash flows are not received for one year and the expected spot rates at that time will be $1 = 11.128 pesos and S1 = 44 080 rupees What is the difference in dollars received that was caused by the delay? (Do not round intermediate calculations. Enter your answer in millions of dollars rounded to 2 decimal places.) he firm would get $ llion more | in one year Hints References eBook & Resources #1Explanation / Answer
Current Spot Exchange Rate
$1=11.732 pesos or 1pesos=$0.0852
$1=45.209 rupees or 1Rs=0.0221
total amount of cash flow= 30,000,000*0.0852+45,000,000*0.0221
=$2556000 +$994500
=$3550500
After Spot Exchange rate
$1=11.128 pesos or 1pesos=$0.0897
$1=44.080 rupees or 1Rs= $0.02269
After Cash Flow= 30,000,000*0.0897 +45,000,000*0.02269 = $2691000 + $1020871=$3,711,871
The firm will get ($3,711,871-$3,550,500)= $161,371 more in one year.
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