Problem 2.6 Microsoft's dividend
In January 2003 Microsoft announced that it would begin paying a dividend of $0.16 per share. Given the following share prices
for Microsoft stock in the recent past, how would a constant dividend of $0.16 per share per ye
Problem 16.1 Window Rock Manufacturing, Inc.
Window Rock Manufacturing, Inc, a U.S. multinational company, has the following debt components in its consolidated capital section. Window
Rock's finance staff estimates their cost of equity to be 20%. Current
MS5313 Managerial Decision Modeling
Part I: Assignment 1
Due date: Class of the 4th week
Problem 1: Managing Ashland MultiComm Services
Recently, Ashland MultiComm Services has been criticized for its inadequate customer service in
responding to questions
Problem 7.7 Akira Numata - CIA Japan
Akira Numata, a foreign exchange trader at Credit Suisse (Tokyo), is exploring covered interest arbitrage
possibilities. He wants to invest $5,000,000 or its yen equivalent, in a covered interest arbitrage between U.S.
Problem 15.1 JPMorgan: Petrobras' WACC
JPMorgans Latin American Equity Research department produced the following WACC
calculation for Petrobras of Brazil versus Lukoil of Russia in their June 18, 2004 report.
Evalue the methodology and assumptions used i
Sourcing Equity Globally
Foreign Equity Listing and Issuance. Give five reasons why a firm might cross-list and sell its
shares on a very liquid stock exchange.
a. Improve the liquidity of its existing shares and support a liqu
Problem 14.3 Deming Pipelines, Inc.
Deming Pipelines, Inc., is a large U.S. natural gas pipeline company that wants to raise $120 million to finance expansion. Deming wants a capital
structure that is 50% debt and 50% equity. Its corporate combined federa
The Global Cost and Availability of Capital
14-14. Cost of Capital for MNEs Compared to Domestic Firms. Theoretically MNEs should be in a
better position than their domestic counterparts to support higher debt ratios because their ca
Problem 12.2 Newport Lifts (A)
Newport Lifts (USA) exports heavy crane equipment to several Chinese dock facilities. Sales are currently
10,000 units per year at the yuan equivalent of $24,000 each. The Chinese yuan (renminbi) has been trading at
Foreign Exchange Rate Determination
Asset Market Approach to Forecasting. Explain how the asset market approach can be used to
forecast future spot exchange rates. How does the asset market approach differ from
Problem 6.4 Forward Premiums on the Japanese Yen/Dollar (/$)
Use the following spot and forward bid-ask rates for the Japanese yen/U.S. dollar (/$) exchange rate to answer the
a) What is the mid-rate from the bid-ask rate quotes?
Problem 11.7 Mattel Toys
Mattel is a U.S.-based company whose sales are roughly two-thirds in dollars (Asia and the Americas) and one-third in
euros (Europe). In September Mattel delivers a large shipment of toys (primarily Barbies and Hot Wheels) to a ma
International Parity Conditions
Real Effective Exchange Rates: Japan and the United States. Exhibit 7.3 compares the real
effective exchange rates for Japan and the United States. If the comparative real effective
exchange rate w
51Eiteman/Stonehill/MoffettMultinational Business Finance, Twelfth Edition
Who Owns Whom? The Economist (December 17, 2001, p. 4 of Survey insert) reported on a
French company that had a subsidiary in India.
Investor Expectations. Proponents of the efficient market hypothesis argue that an MNE should
not hedge because investors can hedge themselves if they do not like the foreign exchange risks
carried by the f
Sourcing Debt Globally
Ex-Post Cost of Borrowing. Many firms in many countries every year borrow at nominal costs
that prove to be very different after-the-fact. For example, not too long ago Deutsche Bank
borrowed funds at a n
Foreign Direct Investment Theory
and Political Risk
80E i t e man/Stonehill/Moffett
Multinational Business Finance, Twelfth Edition
18-19. Operating Strategies after the FDI Decision. The following operating strategies, among other
International Portfolio Theory
Currency Risk. The currency risk associated with international diversification is a serious
concern for portfolio managers. Is it possible for currency risk ever to benefit the
Problem 17.1 Pacific Wietz
Giri Iyer is European analyst and strategist for Tristar Funds, a New York-based mutual fund company. Giri is
currently evaluating the recent performance of shares in Pacific Wietz, a publicly traded specialty chemical
Problem 19.2 Philadelphia Composite
Philadelphia Composite 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 I
Multinational Capital Budgeting
Project versus Parent Valuation.
a. Why should a foreign project be evaluated from both a project and parent viewpoint?
A strong theoretical argument exists in favor of analyzing any foreign proj
People's Republic of China (Mainland) Balance of Payments
Chinas (Mainland) Balance of Payments. Use the following Chinese balance of payments data from the IMF to answer questions 5 through 8.
Assumptions (millions of US dollars)
The Foreign Exchange Market
Reciprocals. Convert the following indirect quotes to direct quotes and direct quotes to indirect
Euro: 1.22/$ (indirect quote); 1/1.22 $0.8197/ (direct)
Russia: Rub 30/$ (indi