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    ST Paul Co Does Business in The United States and

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    Amit Pandey
    St. Paul Co. does business in the United States and New Zealand. It compiled information on its U.S. sales, which are affected by the exchange rate of the New Zealand dollar, New Zealand dollar revenues from sales in New Zealand, anticipated materials costs from U.S. and New Zealand, fixed and variable operating expenses, and interest expenses on U.S. loans. It then forecasted net cash flows under three exchange rate scenarios and how its cash flows are affected by exchange rate movements. It can reduce this sensitivity by restructuring operations without reducing New Zealand business volume.

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    ST Paul Co Does Business in The United States and

    Uploaded by

    Amit Pandey
    120 views1 page
    St. Paul Co. does business in the United States and New Zealand. It compiled information on its U.S. sales, which are affected by the exchange rate of the New Zealand dollar, New Zealand dollar revenues from sales in New Zealand, anticipated materials costs from U.S. and New Zealand, fixed and variable operating expenses, and interest expenses on U.S. loans. It then forecasted net cash flows under three exchange rate scenarios and how its cash flows are affected by exchange rate movements. It can reduce this sensitivity by restructuring operations without reducing New Zealand business volume.

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    St Paul Co Does Business in the United States And

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    St. Paul Co. does business in the United States and New Zealand. It compiled information on its U.S. sales, which are affected by the exchange rate of the New Zealand dollar, New Zealand dollar revenues from sales in New Zealand, anticipated materials costs from U.S. and New Zealand, fixed and variable operating expenses, and interest expenses on U.S. loans. It then forecasted net cash flows under three exchange rate scenarios and how its cash flows are affected by exchange rate movements. It can reduce this sensitivity by restructuring operations without reducing New Zealand business volume.

    Copyright:

    © All Rights Reserved
    Download as PDF, TXT or read online from Scribd
    Download as pdf or txt
    120 views1 page

    ST Paul Co Does Business in The United States and

    Uploaded by

    Amit Pandey
    St. Paul Co. does business in the United States and New Zealand. It compiled information on its U.S. sales, which are affected by the exchange rate of the New Zealand dollar, New Zealand dollar revenues from sales in New Zealand, anticipated materials costs from U.S. and New Zealand, fixed and variable operating expenses, and interest expenses on U.S. loans. It then forecasted net cash flows under three exchange rate scenarios and how its cash flows are affected by exchange rate movements. It can reduce this sensitivity by restructuring operations without reducing New Zealand business volume.

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    Solved: St Paul Co does business in the United States and

    St. Paul Co. does business in the United States and New Zealand. In attempting to assess its
    economic exposure, it compiled the following information.
    a. St. Paul’s U.S. sales are somewhat affected by the value of the New Zealand dollar (NZ$),
    because it faces competition from New Zealand exporters. It forecasts the U.S. sales based on
    the following three exchange rate scenarios:
    Exchange Rate Revenue from U.S. Business
    of NZ$ (in millions)
    NZ$ = $.48 $100
    NZ$ = .50 105
    NZ$ = .54 110
    b. Its New Zealand dollar revenues on sales to New Zealand invoiced in New Zealand dollars
    are expected to be NZ$600 million.
    c. Its anticipated cost of materials is estimated at $200 million from the purchase of U.S.
    materials and NZ$100 million from the purchase of New Zealand materials.
    d. Fixed operating expenses are estimated at $30 million.
    e. Variable operating expenses are estimated at 20 percent of total sales (after including New
    Zealand sales, translated to a dollar amount).
    f. Interest expense is estimated at $20 million on existing U.S. loans, and the company has no
    existing New Zealand loans.
    Forecast net cash flows for St. Paul Co. under each of the three exchange rate scenarios.
    Explain how St. Paul’s net cash flows are affected by possible exchange rate movements.
    Explain how it can restructure its operations to reduce the sensitivity of its net cash flows to
    exchange rate movements without reducing its volume of business in New Zealand.

    St Paul Co does business in the United States and

    ANSWER
    https://solvedquest.com/st-paul-co-does-business-in-the-united-states-and/

    Reach out to freelance2040@yahoo.com for enquiry.


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