On the following graph, use the blue points (circle symbols) to plot the U.S. dollar cash flows from the original operating structure under both exchange rate scenarios $0.80 and $0.90. Then use the orange points (square symbols) to plot the U.S. dollar cash flows from the proposed operating structure under both exchange rate scenarios $0.80 and $0.90. Plot the points from left to right in the order you want them to appear. Line segments will connect automatically. Cash Flows (Millions of Dollars) 40 30 20 20 10 0 4 -10 0.75 0.80 0.85 0.90 Exchange Rate Scenario (U.S. Dollars per Canadian Dollar) Original Operating Structure Proposed Operating Structure (?) Because the line for the proposed operating structure is sensitive to changes in the exchange rate of the C structure. steeper ' the U.S. dollar cash flows in the proposed operating structure are ollar when compared with the U.S. dollar cash flows of the original operating flatter Sales Exchange Rate Scenario C$1=$0.80 Exchange Rate Scenario Exchange Rate Scenario C$1=$0.80 C$1=$0.90 Exchange Rate Scenario C$1=$0.90 Proposed Proposed Original Operating Operating Original Operating Operating Structure Structure Structure Structure (Millions) (Millions) (Millions) (Millions) (1) U.S. Sales $310 (2) Canadian Sales C$3 X $0.80 = $2.40 $310 C19 X $0.80 = $310 $310 C$3 X $0.90 = $2.70 C19 X $0.90 = (3) Total sales in U.S. $ Cost of Materials and $312.40 $15.20 $325.20 $17.10 $312.70 $327.10 Operating Expenses (4) U.S. Cost of $50 $140 $50 $140 Materials (5) Canadian Cost of C$200 X $0.80 Materials $160.00 C$100 X $0.80 = $80.00 C$200 X $0.90 = $180.00 C$100 X $0.90 = (6) Total Cost of $210.00 $220.00 $230.00 $90.00 $230.00 Materials in U.S. $ (7) Operating Expenses $60 $62 $60 $62 Interest Expense (8) U.S. Interest $5 $7 $5 $7 Expense (9) Canadian Interest C$10 X $0.80 = C$5 X $0.80 = $4.00 C$10 X $0.90 = C$5 X $0.90 = $4.50 Expense (10) Total Interest $8.00 $13.00 $11.00 $9.00 $14.00 $11.50 Expenses in U.S. Cash Flows in U.S.$ $29.40 $32.20 $8.70 $23.60 before Taxes

On the following graph, use the blue points (circle symbols) to plot the U.S. dollar cash flows from the original operating structure under both exchange rate scenarios $0.80 and $0.90. Then use the orange points (square symbols) to plot the U.S. dollar cash flows from the proposed operating structure under both exchange rate scenarios $0.80 and $0.90. Plot the points from left to right in the order you want them to appear. Line segments will connect automatically. Cash Flows (Millions of Dollars) 40 30 20 20 10 0 4 -10 0.75 0.80 0.85 0.90 Exchange Rate Scenario (U.S. Dollars per Canadian Dollar) Original Operating Structure Proposed Operating Structure (?) Because the line for the proposed operating structure is sensitive to changes in the exchange rate of the C structure. steeper ' the U.S. dollar cash flows in the proposed operating structure are ollar when compared with the U.S. dollar cash flows of the original operating flatter Sales Exchange Rate Scenario C$1=$0.80 Exchange Rate Scenario Exchange Rate Scenario C$1=$0.80 C$1=$0.90 Exchange Rate Scenario C$1=$0.90 Proposed Proposed Original Operating Operating Original Operating Operating Structure Structure Structure Structure (Millions) (Millions) (Millions) (Millions) (1) U.S. Sales $310 (2) Canadian Sales C$3 X $0.80 = $2.40 $310 C19 X $0.80 = $310 $310 C$3 X $0.90 = $2.70 C19 X $0.90 = (3) Total sales in U.S. $ Cost of Materials and $312.40 $15.20 $325.20 $17.10 $312.70 $327.10 Operating Expenses (4) U.S. Cost of $50 $140 $50 $140 Materials (5) Canadian Cost of C$200 X $0.80 Materials $160.00 C$100 X $0.80 = $80.00 C$200 X $0.90 = $180.00 C$100 X $0.90 = (6) Total Cost of $210.00 $220.00 $230.00 $90.00 $230.00 Materials in U.S. $ (7) Operating Expenses $60 $62 $60 $62 Interest Expense (8) U.S. Interest $5 $7 $5 $7 Expense (9) Canadian Interest C$10 X $0.80 = C$5 X $0.80 = $4.00 C$10 X $0.90 = C$5 X $0.90 = $4.50 Expense (10) Total Interest $8.00 $13.00 $11.00 $9.00 $14.00 $11.50 Expenses in U.S. Cash Flows in U.S.$ $29.40 $32.20 $8.70 $23.60 before Taxes

Quickbooks Online Accounting

3rd Edition

ISBN:9780357391693

Author:Owen

Publisher:Owen

Chapter4: Operating Activities: Sales And Cash Receipts

Section: Chapter Questions

Problem 1.2C

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