536-5a_note

536-5a_note - 369d7a9def17234c02936b55e01974ec96fd23d3.xlsx...

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Unformatted text preview: 369d7a9def17234c02936b55e01974ec96fd23d3.xlsx 11/07/2011 21:43:21 Information U.S.-based Multinational Corporation :Germany Subsidiary XXX, T=0 Operation Information 1. Sales- PRICE = 12.8 / unit- Volume = 1,000,000- 60% sold in Europe- 40% exported to Non-European countries- All sales are invoiced in s- The avearge collection period is 90 days 2. Cost- Produced in Germany with European materials and labor- Direct cost = 9.60 / unit- Operating fixed expenses = 890,000- Depreciation = 600,000- Inventory is equal to 25% of annual direct costs- It can expand production volume without any significant change in per-unit direct costs or overall general and adnimistrative expenses. 3. Other Information- Capital expenditure = 0- Evaluation horizon = 5 years- Terminal value = 0- Additional working capital investment in AR and Inventory. This increase in NOWC will be financed by OCF- Current exchange rate S=1.2 $/- Tax rate= 34%- $ WACC=20% 4. Balance Sheet, as of T=0 (1,000) (1,000) Cash 1,600 AP 800 AR 3,200 ST debt 1,600 Inventory 2,400 LT debt 1,600 Net plant 4,800 Equity 1,800 Retained Earnings 6,200 Total Asset 12,000 Total L & E 12,000 A B C D E F 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 369d7a9def17234c02936b55e01974ec96fd23d3.xlsx 11/07/2011 21:43:21 Table 1 Table 1: Scenario analysis NPV under different scenarios Base Case: PPP Pricing Strategy 100%, 100% Impact on Sales A: No change in sales 0%, 0% B: minor change in sales: -5%, 0% C: major change in sales:-55%, 0% Base Case: PPP Pricing Strategy NPV= $6,028 Impact on Sales A: No change in sales $2,043 B: minor change in sales: $5,186 C: major change in sales: $5,918 Strategy 1: 0% PT Strategy 2: 25% PT Strategy 3: 50% PT Strategy 4: 75% PT Strategy 5: 100% PT Strategy 6: 25%; 100% Strategy 1: 0% PT Strategy 2: 25% PT Strategy 3: 50% PT Strategy 4: 75% PT Strategy 5: 100% PT Strategy 6: 25%; 100% A B C D E F G H 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 369d7a9def17234c02936b55e01974ec96fd23d3.xlsx 11/07/2011 21:43:21 Worksheet Case: Assumptions Input Information T 1 2 3 4 5 Sales Volume(000) European Makret (Domestic) Sales growth 600 Non-European (Export) Sales growth 400 Exchange Rate German inflation - US inflation S = $/ 1.200 Sale Price European sales: ??% degree PT Degree of PT sale prices in s 12.800 Sale prices in $s 15.360 Other sales: ??% degree PT Degree of PT sale prices in s 12.800 Sale prices in $s 15.360 Costs (000) Direct CGS/unit growth 9.600 Fixed Operating cost growth 890 Depreciation growth 600 Tax 34.00% $ WACC 20.00% I. Operating CF Sales (000) European sales volume 600 European sale prices in s 12.800 7,680 Other sales volume 400 Others sales prices in s 12.800 5,120 12,800 Costs (000) CGS price/unit 9.600 Sales Volume 1000.00 9,600 Fixed Operating cost 890 Depreciation 600 11,090 EBIT 1,710 NOPAT (EBIAT) 1,129 Depreciation 600...
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This note was uploaded on 11/07/2011 for the course FIN 536 taught by Professor Staff during the Spring '11 term at S.F. State.

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536-5a_note - 369d7a9def17234c02936b55e01974ec96fd23d3.xlsx...

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