缝尉好有贺上号 国际财务管理 微型案例 1.Does Wedco's strategy of pricing its materials for European customers in dollars avoid economic exposure?Explain. 2.Explain why Circon Corporation negotiates a very short term of payment when selling products overseas. 3.Explain why the earning of Telematics International,Inc.,was affected by changes in the value of the pound.Why might Telematics leave its exposure unhedged sometimes? 9.Assessing PepsiCo's Foreign Projects PepsiCo recently decided to invest more than $300 million for expansion in Brazil.There is much potential in Brazil because it has 150 million people and the demand for soft drinks by Brazil's consumers is increasing over time.However,the soft drink consumption is still only about one-fifth of the soft drink consumption in the U.S.PepsiCo's initial outlay was used to purchase three production plants and a distribution network of almost 1,000 trucks to distribute PepsiCo's products to retail stores in Brazil.The expansion in Brazil was expected to make PepsiCo's products more accessible to consumers in Brazil. 1.Given that the investment by PepsiCo Inc.in Brazil was entirely in dollars,describe the exposure to exchange rate risk resulting from the project.Explain how the size of the Parent's initial investment and the exchange rate risk would have been affected if PepsiCo Inc.had financed much of the investment with loans from banks in Brazil. 2.Describe the factors that were likely to be considered by PepsiCo Inc.when estimating the future cash flows of the project in Brazil. 3.What factors were likely to be considered by PepsiCo Inc.in deriving its required rate of return on the project in Brazil? 4.Describe the uncertainty that surrounds the estimate of future cash flows from the perspective of the U.S.parent. 5.PepsiCo's parent was responsible for assessing the expansion in Brazil.Yet,PepsiCo already had some existing operations in Brazil.When capital budgeting analysis is used to determine whether this project is feasible,should the project be assessed from a Brazil perspective or a U.S.perspective?Explain. 10.Cost of Capital for Subsidiaries in Mexico In recent years,several U.S.firms have penetrated Mexico's market.For example, Underwriters Laboratories,which certifies the safety of electrical products,formed a joint venture with a Mexican firm in the same business.GTE recently established a business along with a Mexican firm that will allow passengers on airplanes in Mexico to make phone calls to residences or offices.Ford Motor Co.,Western Union,and many other U.S.firms have also begun business in Mexico.One of the biggest challenges is the cost of capital to finance businesses in Mexico.Mexican interest rates tend to be much higher than U.S.interest rates. In some periods,the Mexican government does not attempt to lower the interest rates because higher rates may attract foreign investment in Mexican securities.Such a flow of funds into Mexico may ultimately bring Mexican interest rates down.Meanwhile,U.S.firms that operate in Mexico much determine their capital structure in an environment of high Mexican interest rates. 1.Explain how the cost of capital for U.S.firms such as GTE Corporation and underwriters Laboratories,Inc.is affected by expansion into Mexico. -6-国际财务管理 微型案例 - 6 - 1. Does Wedco’s strategy of pricing its materials for European customers in dollars avoid economic exposure? Explain. 2. Explain why Circon Corporation negotiates a very short term of payment when selling products overseas. 3. Explain why the earning of Telematics International, Inc., was affected by changes in the value of the pound. Why might Telematics leave its exposure unhedged sometimes? 9. Assessing PepsiCo’s Foreign Projects PepsiCo recently decided to invest more than $300 million for expansion in Brazil. There is much potential in Brazil because it has 150 million people and the demand for soft drinks by Brazil’s consumers is increasing over time. However, the soft drink consumption is still only about one-fifth of the soft drink consumption in the U.S. PepsiCo’s initial outlay was used to purchase three production plants and a distribution network of almost 1,000 trucks to distribute PepsiCo’s products to retail stores in Brazil. The expansion in Brazil was expected to make PepsiCo’s products more accessible to consumers in Brazil. 1. Given that the investment by PepsiCo Inc. in Brazil was entirely in dollars, describe the exposure to exchange rate risk resulting from the project. Explain how the size of the Parent’s initial investment and the exchange rate risk would have been affected if PepsiCo Inc. had financed much of the investment with loans from banks in Brazil. 2. Describe the factors that were likely to be considered by PepsiCo Inc. when estimating the future cash flows of the project in Brazil. 3. What factors were likely to be considered by PepsiCo Inc. in deriving its required rate of return on the project in Brazil? 4. Describe the uncertainty that surrounds the estimate of future cash flows from the perspective of the U.S. parent. 5. PepsiCo’s parent was responsible for assessing the expansion in Brazil. Yet, PepsiCo already had some existing operations in Brazil. When capital budgeting analysis is used to determine whether this project is feasible, should the project be assessed from a Brazil perspective or a U.S. perspective? Explain. 10. Cost of Capital for Subsidiaries in Mexico In recent years, several U.S. firms have penetrated Mexico’s market. For example, Underwriters Laboratories, which certifies the safety of electrical products, formed a joint venture with a Mexican firm in the same business. GTE recently established a business along with a Mexican firm that will allow passengers on airplanes in Mexico to make phone calls to residences or offices. Ford Motor Co., Western Union, and many other U.S. firms have also begun business in Mexico. One of the biggest challenges is the cost of capital to finance businesses in Mexico. Mexican interest rates tend to be much higher than U.S. interest rates. In some periods, the Mexican government does not attempt to lower the interest rates because higher rates may attract foreign investment in Mexican securities. Such a flow of funds into Mexico may ultimately bring Mexican interest rates down. Meanwhile, U.S. firms that operate in Mexico much determine their capital structure in an environment of high Mexican interest rates. 1. Explain how the cost of capital for U.S. firms such as GTE Corporation and underwriters Laboratories, Inc. is affected by expansion into Mexico