BP and Rosneft 2015. BP (UK) and Rosneft (Russia) had severed a long-term joint venture in 2013, with Rosneft buying BP out with $54 billion in cash and a 20% interest (equity interest) in Rosneft itself. Rosneft financed a large part of the buyout by borrowing heavily. The following year, in July 2014, BP received a dividend on its ownership interest in Rosneft of RUB25 billion. But Rosneft's performance had been declining, as was the Russian ruble. The winter of 2014-2015 in Europe was a relatively mild one, and Europe's purchases of Rosneft's natural gas had fallen as had the price of natural gas. Rosneft's total sales were down, and the ruble had clearly fallen dramatically. And to add debt to injury, Rosneft was due to make a payment of USD19.6 billion in 2015 on its debt from the BP buyout. a. Assuming a spot rate of RUB34.79 = USD1.00 in July 2014, how much was the dividend paid to BP in U.S. dollars? b. If Rosneft were to pay the same dividend to BP in July 2015, and the spot rate at that time was RUB75.03 = USD1.00, what would BP receive in U.S. dollars? c. If the combination of Western sanctions against Russia and lower global oil prices truly sent the Russian economy into recession, and the spot rate was RUB75.03 = USD1.00 in July 2015, what might BP's dividend be in July 2015? a. Assuming a spot rate of RUB34.79 = USD1.00 in July 2014, how much was the dividend paid to BP in U.S. dollars? The dividend paid to BP is $ (Round to the nearest cent.)
BP and Rosneft 2015. BP (UK) and Rosneft (Russia) had severed a long-term joint venture in 2013, with Rosneft buying BP out with $54 billion in cash and a 20% interest (equity interest) in Rosneft itself. Rosneft financed a large part of the buyout by borrowing heavily. The following year, in July 2014, BP received a dividend on its ownership interest in Rosneft of RUB25 billion. But Rosneft's performance had been declining, as was the Russian ruble. The winter of 2014-2015 in Europe was a relatively mild one, and Europe's purchases of Rosneft's natural gas had fallen as had the price of natural gas. Rosneft's total sales were down, and the ruble had clearly fallen dramatically. And to add debt to injury, Rosneft was due to make a payment of USD19.6 billion in 2015 on its debt from the BP buyout. a. Assuming a spot rate of RUB34.79 = USD1.00 in July 2014, how much was the dividend paid to BP in U.S. dollars? b. If Rosneft were to pay the same dividend to BP in July 2015, and the spot rate at that time was RUB75.03 = USD1.00, what would BP receive in U.S. dollars? c. If the combination of Western sanctions against Russia and lower global oil prices truly sent the Russian economy into recession, and the spot rate was RUB75.03 = USD1.00 in July 2015, what might BP's dividend be in July 2015? a. Assuming a spot rate of RUB34.79 = USD1.00 in July 2014, how much was the dividend paid to BP in U.S. dollars? The dividend paid to BP is $ (Round to the nearest cent.)
Financial Management: Theory & Practice
16th Edition
ISBN:9781337909730
Author:Brigham
Publisher:Brigham
Chapter22: Mergers And Corporate Control
Section: Chapter Questions
Problem 5P
Related questions
Question
Transcribed Image Text:BP and Rosneft 2015. BP (UK) and Rosneft (Russia) had severed a long-term joint venture in 2013, with Rosneft buying BP out with $54 billion in cash and a 20% interest (equity interest) in Rosneft itself.
Rosneft financed a large part of the buyout by borrowing heavily. The following year, in July 2014, BP received a dividend on its ownership interest in Rosneft of RUB25 billion. But Rosneft's performance had
been declining, as was the Russian ruble. The winter of 2014-2015 in Europe was a relatively mild one, and Europe's purchases of Rosneft's natural gas had fallen as had the price of natural gas. Rosneft's total
sales were down, and the ruble had clearly fallen dramatically. And to add debt to injury, Rosneft was due to make a payment of USD19.6 billion in 2015 on its debt from the BP buyout.
a. Assuming a spot rate of RUB34.79 = USD1.00 in July 2014, how much was the dividend paid to BP in U.S. dollars?
b. If Rosneft were to pay the same dividend to BP in July 2015, and the spot rate at that time was RUB75.03 = USD1.00, what would BP receive in U.S. dollars?
c. If the combination of Western sanctions against Russia and lower global oil prices truly sent the Russian economy into recession, and the spot rate was RUB75.03 = USD1.00 in July 2015, what might BP's
dividend be in July 2015?
a. Assuming a spot rate of RUB34.79 = USD1.00 in July 2014, how much was the dividend paid to BP in U.S. dollars?
The dividend paid to BP is $
(Round to the nearest cent.)
Expert Solution
This question has been solved!
Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.
Step by step
Solved in 2 steps
Recommended textbooks for you