Lalua Co is a US firm has planning to export its products to Singapore since its decision to supplement its declining U.S. sales by exporting there. Furthermore, Lalua Co. also has recently begun exporting to a retailer in United Kingdom. Below are the details of transactions for Lalua Co. through out of the year: - i. Blades has forecasted sales in the United States of 520,000 pairs of Speedos at regular prices which is $115; exports to Singapore of 180,000 pairs of speedos for SGD25 a pair; and exports to the United Kingdom of 200,000 pairs of Speedos for £80 per pair. ii. Cost of goods sold for 800,000 pairs of speedos are incurred in Singapore with the price of SGD 15; the remainder is incurred in the United States, where the cost of goods sold per pair of Speedos runsapproximately $70. iii. Fixed cost are $2 million and variable operating expenses other than costs of goods sold represent approximately 12 percent of U.S. sales. All fixed and variable operating expenses other than cost of goods sold are incurred in United States. iv. Interest expenses is estimated at $100,000 on existing US loans only. v. You have created three scenarios and derived an expected value on average for the upcoming year based on each scenario in the following table below:- Scenario Average value in Singapore Dollar Average value in Pound 1 $0.7435 $1.3245 2 $0.7652 $1.2567 3 $0.7325 $1.2145 Forecast the net cash flow for Lola Co. under each three scenarios.
Lalua Co is a US firm has planning to export its products to Singapore since its decision to supplement its declining U.S. sales by exporting there. Furthermore, Lalua Co. also has recently begun exporting to a retailer in United Kingdom. Below are the details of transactions for Lalua Co. through out of the year: - i. Blades has forecasted sales in the United States of 520,000 pairs of Speedos at regular prices which is $115; exports to Singapore of 180,000 pairs of speedos for SGD25 a pair; and exports to the United Kingdom of 200,000 pairs of Speedos for £80 per pair. ii. Cost of goods sold for 800,000 pairs of speedos are incurred in Singapore with the price of SGD 15; the remainder is incurred in the United States, where the cost of goods sold per pair of Speedos runsapproximately $70. iii. Fixed cost are $2 million and variable operating expenses other than costs of goods sold represent approximately 12 percent of U.S. sales. All fixed and variable operating expenses other than cost of goods sold are incurred in United States. iv. Interest expenses is estimated at $100,000 on existing US loans only. v. You have created three scenarios and derived an expected value on average for the upcoming year based on each scenario in the following table below:- Scenario Average value in Singapore Dollar Average value in Pound 1 $0.7435 $1.3245 2 $0.7652 $1.2567 3 $0.7325 $1.2145 Forecast the net cash flow for Lola Co. under each three scenarios.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Transcribed Image Text:Lalua Co is a US firm has planning to export its products to Singapore since its decision to
supplement its declining U.S. sales by exporting there. Furthermore, Lalua Co. also has
recently begun exporting to a retailer in United Kingdom. Below are the details of transactions
for Lalua Co. through out of the year: -
i.
Blades has forecasted sales in the United States of 520,000 pairs of Speedos
at regular prices which is $115; exports to Singapore of 180,000 pairs of
speedos for SGD25 a pair; and exports to the United Kingdom of 200,000 pairs
of Speedos for £80 per pair.
ii. Cost of goods sold for 800,000 pairs of speedos are incurred in Singapore with
the price of SGD 15; the remainder is incurred in the United States, where the
cost of goods sold per pair of Speedos runsapproximately $70.
iii. Fixed cost are $2 million and variable operating expenses other than costs of
goods sold represent approximately 12 percent of U.S. sales. All fixed and
variable operating expenses other than cost of goods sold are incurred in United
States.
iv. Interest expenses is estimated at $100,000 on existing US loans only.
v. You have created three scenarios and derived an expected value on average
for the upcoming year based on each scenario in the following table below:-
Scenario
Average value in
Singapore Dollar
Average value in
Pound
1
$0.7435
$1.3245
2
$0.7652
$1.2567
3
$0.7325
$1.2145
Forecast the net cash flow for Lola Co. under each three scenarios.
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