Problem 17.1 Natural Mosaic
Natural Mosaic Company (U.S.) is considering investing Rs50,000,000 in India to create a wholly owned tile manufacturing plant to export to the European market. After
five years the subsidiary would be sold to Indian investors
Problem 15.1 Nikken Microsystems (A)
Assume Nikken Microsystems has sold Internet servers to Telecom Espaa for 700,000. Payment
is due in 3 months and will be made with a trade acceptance from Telecom Espaa Acceptance. The
acceptance fee is 1.0% per annum
Problem 12.1 Corcovado Pharmaceuticals
Corcovado Pharmaceuticals cost of debt is 7%. The risk-free rate of interest is 3%. The expected return
on the market portfolio is 8%. After effective taxes, Corcovados effective tax rate is 25%. Its optimal
Problem 14.1 Avon's Foreign-Source Income
Avon is a U.S.-based direct seller of a wide array of products for women. Avon markets leading beauty,
fashion and home products in more than 100 countries. As part of the training in its corporate treasury
Problem 7.1 Amber McClain
Amber McClain, the currency speculator we met earlier in the chapter,sells eight June futures contracts for
500,000 pesos at the closing price quoted in Exhibit 8.1.
a. What is the value of her position at maturity if the ending
Problem 5.1 Visiting Guatemala
Isaac Dez Peris lives in Rio de Janeiro. While attending school in Spain he meets
Juan Carlos Cordero from Guatemala. Over the summer holiday Isaac decides to
visit Juan Carlos in Guatemala City for a couple of weeks. Isaac'
Problem 13.1 JPMorgan: Petrobrs's WACC
JPMorgans Latin American Equity Research department produced the following WACC
calculation for Petrobrs of Brazil versus Lukoil of Russia in their June 18, 2004 report.
Evaluate the methodology and assumptions used
Problem 8.1 Trepak (The Russian Dance)
The Russian ruble (RUB) traded at RUB 29.00/USD on January 2, 2009. On December 11,
2010, its value had fallen to RUB 31.45/USD. What was the percentage change in its value?
Spot rate, January 2, 2009 (RU
Problem 10.1 Trident Europe (A)
Using facts in the chapter for Trident Europe, assume the exchange rate on January 2, 2006, in Exhibit 11.4 dropped in value from $1.2000/ to $0.9000/
rather than to $1.0000/. Recalculate Trident Europes translated balance
Problem 4.1 Emaline Returns
If the share price of Emaline, a New Orleans-based shipping firm, rises from
$12 to $15 over a one-year period, what is the rate of return to the
shareholder if the following:
a. The company paid no dividends
b. The company pai
SOLUTIONS TO END-OF-CHAPTER
Financial Statements, Cash Flow, and Taxes
NI = $3,000,000; EBIT = $6,000,000; T = 40%; Interest = ?
Need to set up an income statement and work from the bottom up.
Column (A) in Table 13.1 of BMA textbook shows the monthly return on the
British FTSE 100 index from May 2007 through February 2009. Columns (B) and
(C) Show returns on the stocks of two firmsExecutive Cheese and Paddington
Beer. Both firms anno